For freight brokers, the process of carrier onboarding and selection is a constant risk assessment. Before ISO, the Industry didn’t have an established “FICO score” for our freight partners that tells who is reliable and trustworthy. Get onboarding right, and your operation flows well, benefiting from cost-effective, reliable carriers who keep your customers happy. But bringing one bad carrier into your network can have far-reaching consequences.
To put it in perspective, consider this: Carrier-payments platform TriumphPay estimates that $500 million to $700 million of shippers’ and brokers’ freight payments are annually double-brokered.
Beyond the immediate financial implications of onboarding a bad carrier – which can impact your load margins and operational expenses – the fallout from these schemes can damage trust, leading to a loss of customers and market share. When your carriers underperform, your customers suffer, not only financially but also in terms of service levels and reputation.
Fortunately, freight brokers have never been more equipped to help reduce the risk of bringing new carriers into the fold. The key to removing risk from your carrier pool is to put the data, technology and processes in place to help your operators make smart decisions quickly and profitably. Read on to learn more.
The Role of Technology in Carrier Risk Mitigation
Freight brokers’ willingness to adopt and leverage technology to optimize load matching processes is what makes them valuable and trusted pieces of their customers’ transportation networks. But as load matching becomes more automated and efficient, personal relationships and conversations take a backseat to algorithms. This opens the door for bad actors to enter the market and access freight while flying under the radar.
Solving modern carrier selection challenges requires investments in modern solutions. As carriers flooded into the market over the past several years, a double-pronged trust ecosystem is emerging. This “trust tech stack” sits atop the tools you use today, such as TMS and load boards, and trumps tribal knowledge. It’s composed of two fundamental pillars: Carrier Identity and Carrier Service Levels.
Why Is Carrier Identity Verification Software Crucial For Brokers?
In the freight brokerage industry, the consequences of inadequate carrier identity verification are profound and far-reaching. It goes beyond the immediate financial losses, potentially leading to legal issues and causing severe damage to your reputation. Accurate identity verification is not just a recommendation; it’s becoming a fundamental necessity in preventing fraud, such as the perilous double brokering and ensuring that the carriers you engage with are legitimate and trustworthy.
Highway, for instance, champions this cause by harnessing technology to create a robust Carrier Identity profile that brokers can use to verify that any carrier that enters their network is who they say they are. The profile includes data on factors like insurance, DOT compliance, dispatch detection, and more. Their innovative approach not only prevents fraud but also ensures compliance with regulations, safeguarding your business from potentially disastrous outcomes.
Highway also helps automate previously manual steps in a team’s onboarding process, meaning your team can identify and leverage reliable carriers faster, meeting the last-minute demands of the shippers they service.
How Carrier Service-Level Data Mitigates Risk
Data-driven decision-making will always trump “tribal knowledge” or educated guesses when it comes to carrier selection and management. Yet when it comes to carrier performance, brokers have had little else to go off of when bringing new partners into the fold to run a specific lane.
Carrier service-levels have long been a black box. You only understand how they’ll perform for you once they’re already in the network and missing appointments for your customers. But what if your reps had access to an objective third-party source of data on every carrier’s performance in the industry? They could use this data to cross-reference someone found in a load board, or even directly source top performing carriers.
ISO provides brokers with just such a platform. ISO automatically creates carrier scorecards in near-real time out of your TMS data, and provides industry-wide service benchmarks and sourcing tools that remove any remaining risk from carrier selection. .
The new broker tech stack is composed of a layer of trust, providing data on both a carrier’s identity and their service-level performance history. These tools empower data-driven decision making across a broker’s carrier sales operation, leaving little to chance when it comes to knowing who will and show up and how they’ll perform for customers. Embracing the “trust tech stack” will be a powerful differentiator and another lever for automation for the brokers that survive today’s struggling freight market.
The Steps to Eliminate Risk in Carrier Onboarding and Selection
Risk mitigation in carrier onboarding and selection requires more than technology. It is a multifaceted process that hinges on embracing technology, data, and collaboration. Here are the seven essential steps to eliminate risks and ensure a smooth, efficient logistics operation:
Step 1: Make The Right Tech Investment
- Implement technology solutions like Highway and ISO that streamline the carrier onboarding and selection process.
- Utilize tools like ISO to access real-time performance data on carriers before reaching out, ensuring you’re making informed choices.
Step 2: Build a 3-Step Carrier Onboarding System
To eliminate risks in carrier selection, it’s crucial to establish a three-step onboarding process for new carriers:
- Identity Verification: Conduct rigorous identity checks to ensure the legitimacy of potential carriers. Assess the makeup and quality of the fleet as well as dispatch verification records.
- Compliance and Safety Assessment: Ensure that carriers meet all regulatory and industry standards through a comprehensive compliance assessment. Also evaluate safety records to ensure the carrier is hiring and training the best drivers and equipment.
- Performance Evaluation: Leverage technology-driven solutions like those offered by Highway to streamline and enhance identity verification, compliance checks, and real-time performance data access, ensuring accuracy and efficiency in carrier onboarding.
Step 3: Train Your Teams To Know Compliance Requirements
- Ensure that your team is aware and able to perform detailed compliance checks to ensure carriers meet all regulatory and industry standards.
- Utilize technology to automate and streamline the compliance check process, reducing errors and enhancing efficiency.
Step 4: Cross-Reference Carrier Service Data
- Leverage ISO Scorecards and performance data to cross check and assess the suitability of carriers for specific loads, ensuring your choices align with your service and reliability standards.
- Make informed decisions about carriers based on data and performance metrics.
Step 5: Incentivize Teams to Build A Strong Network
- Encourage your teams to adopt a proactive approach to carrier onboarding and selection by building deeper connections with stakeholders.
- Stay abreast of industry trends and technological advancements to continuously improve the process, ensuring your brokerage remains competitive.
Step 6: Measure and Evaluate Process Performance
- Regularly monitor and evaluate the performance of carriers to ensure they meet the required standards.
- Use performance data to make informed decisions about future carrier selections, creating a cycle of continuous improvement.
Step 7: Collaborate and Share Insights With Peers
- Engage in strategic collaborations with other industry stakeholders to share insights and best practices.
- Work together to create a standardized approach to carrier onboarding and selection, fostering a more secure and efficient industry.
By following these steps, freight brokers can navigate the complex landscape of carrier onboarding and selection with confidence, minimize risks, and pave the way for a more secure and efficient future in the freight industry. With innovative solutions like Highway and ISO, you gain the tools and insights to navigate this journey effectively. Together, these systems can propel the freight industry toward a future built on trust, reliability, and data-driven excellence.