"From a financial standpoint, we have found during the first half of 2009, for what probably started towards the end of 2008, is that based upon the decline in freight volumes and the resulting increase in available capacity the cost of our freight movement has come down, and our top line has come down as well," said Bill Wunderlich, CFO of Sunteck Transport Group. "But, we've been able to actually achieve higher margins during the first half of this year than we had during the latter part of 2008. What we are doing is taking a very aggressive stance to look for opportunities to grow our business, not just cutting back in certain areas."
One way brokers can grow their business and stay on top in the down market is by expanding overseas, panelists said. KC Pelle, president of the MEGA Companies, gave a few tidbits on what MEGA has done, including developing international trade and value-added services, ramping up their focus on the major producing countries and becoming more knowledgeable about the existing trade agreements that are being developed. The company concentrated on the top 50 ports by volumes worldwide. Pelle said MEGA reached out to new agent partners and transferred some of the company's domestic marketing funds to boost the company's international presence.
Steve Wortman, manager of airfreight and international general commodities for UniGroup Worldwide UTS, said expansion is key. UniGroup managed to grow its overseas presence by purchasing an entity in Asia. The company also diversified into other markets, such as airfreight, specialty flatbed services and advanced technology solutions. "This certainly has helped us weather the storm through this crisis in housing," he said.
Another tip for keeping profitability up is to closely screen carriers and shippers, especially when it comes to credit. H&W Trucking has been delving more deeply into customers' credit, using new services to get that information. "We didn't used to have to do much of a credit check on our customers before: just the basic credit check," said Barcy Vidt, president of H&W.
Vidt said the issue is especially rampant when it comes to carriers that agree to haul for two brokers at the same time, leaving the lower rated freight without a truck. "We have had a lot of problems with that in particular, so we've had to employ other methods to start qualifying our carriers, which takes more personnel and more time," Vidt said.
Truck brokers will also find that investment in technology can go a long way, in terms of automating processes, according to the speakers. "We have our own proprietary technology system, but we are constantly looking for ways to utilize technology, and maybe even replace people over time with technology," Pelle said.
"Having better information, being able to better analyze the business than you do such as the routes that you run, your profitability by customer, profitability by agent, and having the ability of customer access so that they can directly see what's happening with their freight are all benefits of having great technology systems. We think that even in poor economic times you need to continue to invest in and continue to improve your technologies."
The panel discussion also focused on the continuous decline in rates, which are down anywhere from 20 to 67 percent. Pelle said rates are dropping among shippers of all sizes-small, medium and large. "Everyone knows there's no demand in the marketplace," Pelle said. "It's a shipper's market right now. Shippers would be kidding themselves if they didn't try to have some rate modifications, at least on their core lanes."