Digital Freight Brokerage vs. Traditional Freight Brokerage: Pros & Cons

Digital Freight Brokerage vs. Traditional Freight Brokerage: Pros & Cons
Many carriers and shippers have a choice between a digital freight brokerage and a traditional freight brokerage. Both sides of the field can enhance the supply chain process for carriers, shippers, and customers. However, there are pros and cons that need to be considered when selecting which type of freight brokerage is right for your business. And, it’s important to recognize how a digital brokerage can help enable more continuous growth.

Traditional Brokerages Rely on Manual Communications

One area of supply chain optimization includes hiring a freight brokerage that is readily available and relies on automation throughout all operations. Traditional brokerages may not endorse the same capabilities as a digital freight brokerage. It’s important to understand that traditional brokerages rely on manual communications. These manual processes, like phone calls or emails, can take up valuable time just trying to contact other parties. With traditional methods, brokers must physically take the time to contact each potential new carrier when the need arises.

Digital Brokerages Leverage Real-Time Data and Collaborative Resources

One of the most lucrative functions of a digital freight brokerage is the ability to monitor data in real-time. The systems of record collaborate and pool information in a user-friendly platform. This means they can communicate immediately with all available information. As such, they are more capable when it comes to managing the day-to-day flux of information.

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Traditional Brokerages Have a Limited Network

Traditional brokerages also have a limited network. With the manual processes, it can be a challenge to find carriers and recruit more shippers. Traditional businesses likely keep physical paperwork for items like the contacts of the shippers or carriers they engage. Keeping paperwork poses issues if items are lost or damaged, and does not allow for auto-updating like digital networks, which limits the network of carriers for shippers.

Digital Companies Can Access Global Resources at the Push of a Button

Another added benefit of hiring a digital freight brokerage is the availability of resources. Digital companies can harness the power of the internet with automated systems to connect shippers to carriers seamlessly, according to Convoy.com. This greatly expands the options for shippers to meet their resource needs. Features like intermodal shipping or drayage services can bridge the gap for capacity crunches making all shippers available globally.

Traditional Brokerages Focus on Service Over Quantity

While service is a valuable tool for brokerages, focusing on service alone can cost money. Carriers’ interests lean more toward quantity for their paycheck. With traditional brokerages, carriers may not get all of the work they strive for, and in return, shippers may not get the same quality of service from the carriers.

Digital Brokerages Focus on Service in Tandem With Quantity

The beauty of working with a digital freight brokerage means the focus does not solely rely on service. With a digital freight network, the focus on quality, quantity, and excellent service can happen in tandem. Shippers and their customers should not need to sacrifice one or the other when there is an established way to have it all.

Traditional Brokerages Experience Typical Freight Payment Delays

Traditional brokerages must also deal with typical payment delays. However, the lack of technology or other freight payment delays can cause residual delays for shippers. Little or no technology integration also affects those who must pay with alternative electronic methods. As a result, future shipments may also be affected if a brokerage cannot quickly and accurately process payments.

Digital Businesses Can Integrate Payment to Shorten the Payment Clock

Partnering with a digital freight brokerage means utilizing an updated payment clock. This prevents costly delays for carriers and shippers alike by providing seamless integration of payments. Digital companies can consolidate their systems to support platforms such as these.

Traditional Brokerages Are Highly Reactive

Traditional brokerages tend to be reactive to shipping claims and all processes, as opposed to proactive. This means they must wait for an issue to arise before responding to it. Limited access to technology can hinder this process and extend it exponentially. This can add entire days to a shipment if they are stuck in an ocean freight port or use other more time-consuming transport modes. Each minute counts.

Digital Brokerages Are Highly Proactive

Armed with technology, a digital freight brokerage can assess shipments as they occur. This real-time, radical visibility allows each level of the supply chain to monitor shipments through each step. Doing so provides proactive problem solving by enabling capabilities that can handle each unexpected issue as it arises.

Traditional Brokerages Paid Whatever Carriers Wanted

The most costly con for choosing a traditional brokerage is that shippers must pay whatever fees carriers set for a given brokerage. This leaves no wiggle room or cost-saving measures. If traditional brokerages do not have access to more data, they will pay the carrier’s price, which drives up long-term costs.

Digital Brokerages Pay What Carriers Are Worth Based on Market Data

Digital businesses can view all carriers available on more broad networks. This enables businesses to filter through the carriers that are worth hiring based on compiled market data. Choosing the best carrier will reduce issues with freight claims management and continue to keep everyone happy while saving money.

Be Future Ready With Digital Prowess by Choosing the Right TMS

For shippers, a digital freight brokerage will solve most issues brought forth from manual processes. Benefits far outweigh those of traditional brokerages and provide services on a global scale, allowing for growth. From the inception of the order to the final mile, find the right TMS to handle the entire shipment lifecycle.

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