The pandemic upended global supply chains, and carriers were forced to reduce capacity to survive. The economic recovery is now underway — but so is peak season. While shippers are eager to move massive amounts of inventory, carriers have yet to shake the lingering effects of COVID-19-induced slowdowns and labor reductions. Shipping demand is skyrocketing right as carriers are becoming more selective about the loads they’ll move.
In the middle of this acute shipping crisis sit the brokers, who will lose out on revenue and miss new business opportunities if they can’t supply customers with trucking capacity.
A single freight broker can’t fix all the industry’s problems. You can, however, meet shippers’ needs by increasing efficiency and streamlining operations. It all starts with financial agility, the ability to ensure you always have the money required to deliver world-class service to shippers and carriers alike.
Get Carriers To Prioritize Your Freight
Trucking capacity shortages were an issue even before the pandemic, and COVID-19 worsened the situation by spurring layoffs and early retirements. Economists now predict the U.S. supply chain will be short 100,000 drivers by 2023. Competition for carriers is fierce, but you don’t have to tie up all your time and effort in the battle. Instead, you can get carriers to come to you.
Every freight broker knows the supply chain sector depends on relationships. Being a good customer gets you good service and repeat business. You can use this fact to your advantage.
Shippers have a lot of inventory to move, but many are still reeling from the pandemic. As a result, these shippers are falling behind on their payments. If your brokerage always pays carriers promptly, then carriers will be eager to choose your freight over everyone else’s. Leveraging a financial platform with carrier QuickPay options, like Denim, allows you to pay carriers in as little as 24 hours. You’ll earn a reputation for reliable, on-time payment — and become a broker of choice for carriers.
Of course, that’s easier said than done. When shippers pay late, freight brokers may suffer cash flow deficits. How do you pay carriers when shippers aren’t paying you? You could spend your own cash reserves as you wait for invoices to be fulfilled, but that can leave your brokerage financially insecure and unable to accept new business even as the market expands.
This is where financial agility comes in. Some financial platforms and partners offer selective factoring, a service that allows you to turn unpaid invoices of your choosing into overnight payments. With factoring, you always have money to pay carriers regardless of your outstanding receivables. Shippers may have to delay their payments, but that won’t affect your ability to meet existing customer demand, solicit new business and become the broker that carriers prioritize above the rest.
Boost Employee Productivity by Mitigating Financial Risk
Disruptions to your cash flow don’t just jeopardize your relationships with carriers — they can also harm employee recruitment and retention when you need labor power the most. Peak season is an all-hands-on-deck moment, but when suppliers pay late, you might struggle to make payroll. That can lead to layoffs and turnover when you should be ramping up activity.
To make matters worse, a late paycheck or round of staff reductions can leave a lasting mark on your brand in the talent market. Even in good times, you may find it harder to attract new hires.
The good news is that labor issues are not expensive things to fix. The same kind of relationship dynamics that apply to carriers apply to workers. When you pay your staff members competitively and on time, they’ll be more satisfied and engaged at work. When they’re more satisfied and engaged, they’re more productive and less likely to make mistakes. Essentially, your workers will become more efficient, more effective and better able to meet peak season customer demand even when capacity is tight.
Ultimately, when you leverage financial tools such as factoring to gain consistent cash flow, you don’t just secure more carriers — you also get more out of your own staff members.
Automate Back-Office Tasks So You Can Focus on Mission-Critical Work
Keeping employees retained and maximally productive is only one part of the equation when it comes to meeting customer demand during peak season. You also need to ensure every team member focuses on mission-critical tasks such as new business development, optimally managing day-to-day logistics and building relationships with new and existing carriers. If your team members are bogged down with back-office administration, these crucial revenue-generating activities may fall by the wayside.
This year, you may find it even more difficult to handle all the high-value tasks. Labor shortages aren’t limited to trucking, and your team may have some gaps. Additionally, the financial straits of shippers might mean your team has to spend more time processing invoices and chasing down payments.
You can reorient your workers toward those mission-critical tasks by automating much of your back-office operation. A solution like Denim Payments can, for example, automate invoicing, taking this critical but menial task off your employees’ plates. Some financial platforms also offer managed collections, which means employees can spend less time hunting down receivables and more time securing capacity and delivering stellar service to shippers. Plus, automated invoicing and managed collections offer the added benefit of making sure your company gets paid. Combined with tools like factoring, these services give your freight brokerage financial security when it’s needed most.
Winning Peak Season With Financial Agility
Operational agility is more than just a buzzword. Even under the best economic circumstances, the most agile freight brokers see the most success during peak season. That’s because they can get creative and ensure optimized efficiency for shippers, carriers and employees alike.Achieving that kind of operational agility depends on achieving financial agility first. You can’t deliver streamlined service without the assets to support that service. Don’t let cash flow disruptions keep you from meeting peak season demand this year. Find a financial partner who can help ensure you always have the people, relationships and resources you need to thrive, regardless of what happens.
If you’re interested in learning more about how Denim can help grow your credit and help build your business, we’d love to talk.