The top 3% of freight agents generate 80% of the gross industry revenue.
Consider that. There are 30,000 active freight brokerages. 900 of those freight brokerages make 80% of the money.
In a vast sea of freight agents with relatively similar service offerings, how does anyone rise to the top? How does anyone differentiate themselves?
The answer: Specialization, or the deliberate pursuit of a niche. When paired with the right freight brokerage, specialization gives you the edge to rise above the noise.
Here’s how specialization produces the industry’s top agents.
Why is Specialization So Effective?
Before diving into how to specialize your business, it’s important to understand why specialization is so game-changing.
One of the most difficult parts of running a freight brokerage is the sheer enormity of the competition. Between 2020 and 2022, the number of freight brokerages grew 167%. The industry is exploding.
When you consider the size of the industry and its relatively homogenous product suite, that is, mediatory services from carriers to shippers, you can begin to understand why making a difference is just so difficult.
By targeting a niche through specialization, you refine your pool of competitors from dozens of thousands… to just dozens. Further, carriers tend to favor brokers with deep industry knowledge, thereby deepening your client pool.
Specialization is the best way to grow. So, how do you specialize your freight business?
Three Pillars of Specialization
When specializing your business, there are three directions you may take.
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Equipment Type
In this strategy, you focus your specialization on a niche equipment type and allocate resources to a specific type of freight.
A few examples of equipment type specialization include:
- Flatbed/Step deck/RGN: Specializing in this equipment type can give you a favorable niche for industrial products.
- Reefer/Temperature-controlled: Specializing in cold chain gives you an edge in produce, meat, and pharmaceuticals. When this niche is further refined to a specific commodity, such as peaches, you can become a go-to for shippers.
- Power only/Double drops/Lowboys: Niche-heavy-haul jobs often require a dedicated expert. Though the start-up can be slow, this is a lucrative path in the long haul.
Each equipment type comes with a variety of trade-offs (easier to start, higher profits, etc). Which you choose depends on your management style.
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Commodity and Industry
Carving a niche can also be accomplished by specializing in a particular industry. This approach allows you to be an expert on a product.
Some examples include:
- Produce: Produce comes with endless nuance. Some clients would greatly benefit from a deep understanding of shifting profitability in produce across seasons.
- Steel and building materials: Though more esoteric, becoming an expert on industrial materials can make you a broker of choice for countless clients who ship industrial products.
- Consumer-Packaged Goods: Always in demand, consumer-packaged goods often require high delivery velocity. As such, many clients choose brokers with a deep knowledge of consumer-packaged goods to keep operations running smoothly.
- Military: Specializing in military products will yield some of the most devoted customers… and some of the most interesting stories.
When selecting a commodity or industry to specialize in, the more niche, the better. Making yourself an essential for shipping a particular commodity is a great way to secure business.
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Geography
Specialization can also mean becoming a local legend. Forging a niche in a region grants an uncommon familiarity with a place and its people.
Examples of geographic specialization include:
- Regional dominance: If you know a city like the back of your hand, running an ultra-optimized supply chain within a region can be a powerful way to gain client loyalty.
- Cross-border freight: Many brokers don’t bother with cross-border shipping because of the administrative complexity. If you’re willing to put in the work, this could be a niche with an insulated barrier to entry.
- Port drayage and intermodal: Similar to cross-border, these simply require a depth of esoteric knowledge that only a few are willing to invest in.
Though any of these directions would make an enormous difference, a hybridization of several niches, particularly those with cross-overs, could be majorly effective.
Selecting the Right Freight Agent Program
Selecting the right freight agent program is imperative for complementing your department of specialization. Then again, choosing a freight agent program that doesn’t serve your niche could impede your business.
Here are some criteria to watch for when choosing a freight agent program:
- Carrier network depth in your niche: Does the program offer network carriers that service your focus? This should be a primary consideration.
- Technology stack alignment: Does the freight agent program offer a technology stack that is conducive to your variety of specializations? This is operationally imperative to prevent wasted time.
- Back-office support: Does the freight agent program offer back-office support that complements your niche?
All of these considerations center around the suite of offerings that best amplify your niche.
Specialization is the necessary road to freight agent greatness. Specialization can come in a host of forms, but when paired with a great freight agent program, you can achieve certain success.
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