As a freight broker, you know the importance of staying ahead of trends in your business. 2014 was a dynamic year for shipping and freight, and 2015 might present us with some surprising changes as well. One month in, here are our predictions for freight brokers in 2015:
Manufacturing Comes Home
For decades, globalization has defined the supply chain. Companies have shifted manufacturing outside of North America, and shipping has been consolidated to large, central import locations.
While globalization is here to stay, there are some indicators that the trend may be reversing. MIT reports that more and more companies are seriously considering returning some of their manufacturing to the USA, citing several factors. Labor costs have steadily increased in China in the last decade, and as energy costs destabilize, there are strong incentives for keeping manufacturing closer to the point of sale. Consumers are also getting pickier, and domestic manufacturing offers stronger quality control, and quicker turnaround from manufacturing to sale. With some consumer goods, like clothing and electronics, this quick turnaround time is becoming more important by the day.
What does this mean for freight? Manufacturing and shipping points might be more decentralized, with smaller loads originating in more places all over the country. Shipments may have fewer miles to travel, but there will almost certainly be more to organize in terms of logistics.
Insurance Hikes Could Be On the Horizon
After some high-profile accidents in the past year, the Federal Motor Carrier Safety Administration is looking for ways to minimize fatalities, and keep roads safer, in 2015. The current insurance minimums of $750,000 for general freight, and $1 million for hazardous materials, which haven’t been touched since 1985, are coming under particular scrutiny.
Considering inflation over the past 30 years, and the rise of medical costs, the FMCSA claims that current minimums should be raised significantly, perhaps by $1 million or more. The proposed rate hikes are meeting strong opposition, however, from some industry professionals who think they are excessive, and won’t keep the roads safe.
Still, it’s likely that insurance minimums will be closely examined, and potentially raised, in 2015. Rate hikes are inevitable, and your brokerage should always keep the funds on hand for changes like these. Keep your ear to the ground for more news about insurance minimums, and plan ahead for higher insurance costs in the near future.
Of course, the best way to manage your insurance costs is to keep your record spotless. Make sure you stay up-to-date on all your necessary licenses, bonding requirements, and insurance premiums, and build a reputation for safe practices.
Expect Competition to Get Even Tougher
With the cutthroat competition that freight brokers already face, it’s hard to imagine the industry becoming even more competitive. However, that’s exactly what’s in the forecast for 2015. Not only is competition fierce from other freight brokerages, but other segments of the shipping industry are eager to step in as well. New transportation management technology is streamlining the entire shipping process, and some shippers are looking for ways to bypass freight brokers altogether. Meanwhile, some carriers are trying to play the part of brokers as well.
Some new players on the scene might change the face of shipping, and the role of freight brokers, even more in 2015. One start-up, Transfix, is earning a lot of attention for bringing an automated approach, similar to Uber, to transportation shipping.
With the advent of this new technology, freight brokers will be under more pressure than ever in 2015. Your brokerage can rise to the challenge, however. Use transportation management software, and automate your process, in order to increase your efficiency and make more thoughtful choices about which carriers you match with shipments. The rise of Transfix is putting more attention on wasted miles, by using their automated maps to match shipments with the closest trucks in order to reduce driving distances.
In the end, the best freight brokers will use these new tech solutions to their advantage. A great freight broker can deliver the same services that an automated system can, but the best automated services can’t offer the human touch of a great freight broker. Maximize your efficiency, while cultivating the strong business relationships that make your brokerage indispensable.
2015: A Year of Growth, in Spending and Shipping
Despite some of the new challenges that freight brokers face, 2015 is likely to be a strong year for freight, and the economy as a whole. Fuel prices are low, and likely to stay that way for much of the year. This is stimulating growth at every link of the supply chain, from manufacturers to consumers, who all have more spending power.
Meanwhile, as consumers shop more, they’re also shopping more online. This means more shipping all over the country, and companies will increasingly hustle to bring quality goods and fast delivery to their customers. Freight brokers who can rise to the challenge, with improved logistics as well as integrity and honesty, have a lot to look forward to.
As a freight broker, what are your predictions for 2015? What are your biggest worries, and what most excites you about the changes on the horizon? Join the conversation in the comments below!