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Top 5 Reasons Why Brokers Fail to Grow

by Carggo, on Aug 5, 2019


Many freight brokers tend to fail because of a number of issues that they face. Here are some of the most common problems that prevent brokers from achieving success.

Expensive Overhead

One of the biggest problems that brokers have to deal with is costly overhead, which is especially difficult to maintain as a start-up or a smaller, but growing brokerage due to the lack of accessible capital. While expenses for smaller brokers may be less compared to larger businesses and other industries in transportation, growing brokers require financing to help pay for marketing, transportation attorneys, website development, claims management, expansions, equipment, and working capital, among other expenses.

Freight brokers are also required to pay for their bond annually to maintain regulatory compliance. Failure to prepare for these expenses combined with an inability to get affordable capital can ultimately result in failure before there’s a chance to grow.

Poor Time Investment

For smaller brokerages, time is often divided between finding new customers and locating carriers to haul their customers’ loads, tracking, accounting, and other aspects. As a result, this imbalance and lack of resources needed to handle both of these areas efficiently can hold brokers back. Brokers need to make sure that they can attract new customers on a consistent base while being able to provide sufficient service for their existing customers.

Competing in the Spot Market

Small brokers attempting to compete in the spot market may also struggle. As smaller brokers take more time to provide accurate pricing and book services, larger 3PLs and digital brokerages are capable of providing instant quotes and booking, which gets their customers going as soon as possible. Like in many other industries using efficient digital solutions to streamline processes, freight customers want instant services and results and won’t have the patience for anything less, which brings us to our next issue.

Digital Technology

Today’s freight management technology gives companies the ability to provide customers with comprehensive solutions that leave no part of their operations overlooked. The freight industry has developments such as carrier apps, real-time tracking, instant pricing and booking, and paperless documentation and invoicing. If a small broker wants to keep up, utilizing these convenient solutions and offering them to customers is crucial to success.

Carrier Procurement and Operational Support Management

Smaller brokers and those just starting out may also have a difficult time procuring carriers and gaining access to a large network. It’s important for brokers to have a strong relationship with carriers and suppliers, which can benefit them in the long-term. Larger networks give you access to more competitive rates but cost more in overhead and require more working capital plus not to mention the time to procure and manage—time that could be spent securing more business.

With the right connections, brokers can get more operational support and even see more referrals to prospective customers or longer-term contracts with carriers and suppliers. Without the right relationships in place, freight brokers will struggle more to maintain efficiency and profitability.

Work with Carggo to Alleviate These Pain Points

Brokers have taken certain steps to avoid these issues when growing, including becoming freight agents to benefit from more backing. However, brokers often sacrifice autonomy in the process. Other brokers turn to companies that only provide carrier solutions without other elements needed for growth and expansion.

Here at Carggo, we not only offer agents carrier solutions and more freedom, but we also provide dedicated operational and back-office support and a reliable carrier network with GPS capabilities. With Award-Winning Service, Carggo can help you grow faster and more reliably.

What’s preventing you from growing faster? Learn how Carggo can help you grow faster without increasing your costs. 

Call (312) 635-6005 or email us at info@carggo.com.

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Topics:Carggofreight logisticsfreight agentfreight brokerlogistics agent