Freight Brokerage 2021 Outlook
Featuring Aaron Schmidt, Regional Vice President at NFI
What do you think will be in store for freight brokerage in 2021?
I can tell you that I did not expect 2020 to be what 2020 turned out to be. Where we are today with capacity being tight, reemerging COVID flare ups, vaccines coming online, and an election that can impact legislation, going forward for our economy is up in the air. Some of the permanent changes as a result of 2020 volatility makes 2021 all the more uncertain as to how things play out.
If I were to make an educated guess, I would say that we’re going to continue to see pretty tight capacity in the market through at least the first half of the year. People are still spending on goods more so than services, so we’re going to continue to see inventories that need to be rebuilt. Many of those inventories were bled down in mid-2020 and have worked hard to get back to normal in the second half of the year, and I think they’re going to continue to do that in the first part of 2021.
Do you foresee regulations from the new administration impacting the brokerage market?
We’ve been in this consumer-driven economy over the past couple of years and the cycle would say that manufacturing won’t stay down forever, regardless of a new administration. I think the fracking business is really dependent on the price of oil, which has continued to be low. I wouldn’t expect that those markets would come back too strong very soon. I also don’t expect the flatbed market or industrial businesses to cause an increase in demand that would impact capacity at least through the first half of the year.
When it comes to manufacturing, I think that shippers are looking to shorten their supply chain, and where they decide to keep inventory and manufacture goods will likely be determined through legislation from the new administration. Things that have once been sourced from China might change to source from Mexico with a cross-border strategy, or domestically within the US. Manufacturing in Mexico, cross-border business, and the demand of freight inbound to the US may all be impacted.
What should shippers take into consideration in 2021?
This year has really made the shipper community think about who they partner with and overall provider value. The value that NFI provides to shippers is not just our assets, trucks, warehouses, or non-asset services, but it’s that we focus on our strategy. Delivering customer value, innovation, continuous improvement, and developing talent and people, ultimately provide customers with the resources they need to execute and be relevant in the future. They need to understand what they get out of the relationship long term.
Do you think that shippers are going to reevaluate how often that they are looking at their providers?
I talk a lot about volatility and change, and the ability to adapt to change is more important now than ever. So when you think about how customers run their procurement cycles, long ago it was on a more biannual basis. Then it started to become on an annual basis. Today we’re starting to see customers conduct their procurement events either on a semi-annual basis or a quarterly basis in order to stay on the leading-edge of change. If they are slow to adapt to the market, they’ll be left without the ability to move freight when capacity gets tight; other shippers in the market will take advantage of the equipment that’s available, and they’re going to struggle to move freight. If they continue to look at partnering with the right people and running more frequent procurement events to keep what they’re paying to their partners in line with the marketplace, that’s probably best practice right now to go to market.
How do you see NFI helping shippers in the new year?
So 2021 is uncertain and could continue to be volatile, similar to 2020. The reality is that we don’t know, and there are certain things that we can and cannot control. Continuous improvement, innovation, and most importantly, our people, are the value that we provide to our customers. Our people have shown the ability to adapt, to change, and be resilient in the face of adversity. Let’s be honest, 2020 has not been an easy year for the shipper community and the providers that service them, but our people have found a way to get things done for our partners. I think that the value that we will bring to our partners in 2021 is the ability to get it done no matter what the environment, and do it better than our competitors.
What are you most excited about in 2021?
I’m excited about change. With volatility comes opportunity. We’ve worked to get through a difficult time in 2020, it seems like it’s been three years rolled into one. And I think that I’m excited to get back to seeing people more frequently when the pandemic is under control and travel opens up a bit more. I’m excited to see our people again and connect with the relationships throughout our organization.
I’m really excited to see our customers again. I’ve been seeing customers consistently over the past 20 years, and now I haven’t been on a plane since February and live in a virtual world. It’s the people that make the difference, so seeing our customers and really having the opportunity to spend some time with them to further develop the relationships is something that I look forward to.
Aaron is a senior leader within NFI Brokerage, which is made up of 250 employees spanning across 10 locations in North America. With more than 40,000 carrier partners, NFI’s brokerage capabilities span committed capacity, refrigerated, consolidation, flatbed, over-dimensional, intermodal, car hauling, final mile, and more, moving more than 300,000 shipments annually for its customers.