Taxes can be confusing, especially for small and medium-sized freight brokers who don’t have in-house accounting teams. Adding to the confusion, most brokers use some kind of freight factoring service, which can make tax season even more complex by changing when payments are received, adding fees, and more.
In this article you’ll learn some of the impacts factoring can have on your taxes, and what your brokerage needs to know for the 2023-2024 tax year and beyond.
In this article we may use the terms freight bill factoring, invoice factoring, and factored receivables interchangeably, which all essentially mean the same thing: A freight broker sells unpaid invoices to a freight factoring service in exchange for a slightly discounted amount of cash up-front.
Factoring gives brokers enormous flexibility, allowing them to pay their carriers without waiting for their customers (shippers) to pay their invoices. While factoring can provide liquidity to brokers, it also raises tax questions such as:
These are fantastic questions because factoring can have some impact on your tax deductions and liability. We’ll do our best to address each of these questions (and more!) in this article.
Invoice factoring is great for freight brokers and fleets, which is why most brokers use a factoring service. Factoring is one of the only ways to collect cash upfront for invoices, without having to wait 30-90 days for customers to pay.
The biggest benefit of factoring is by providing your brokerage with smooth and predictable cash flow. Factoring gives brokers peace of mind knowing they’re not going to be hanging on the whims of their biggest client’s accounts payable department. Plus, for growth-minded brokerages, it gives you the working capital you need to invest back into your business.
Factoring works by selling your unpaid invoices to a factoring company for a small fee, which is usually 1-5% of the invoice. Your factor pays you upfront for the remaining balance of the invoice, and then collects on the invoice from your customers.
This differs from traditional loans which have high interest rates, add debt to your balance sheet, and decrease your free cash flow.
Recourse Factoring: Recourse factoring (also known as full recourse factoring) means that your brokerage takes on any liability for unpaid invoices. Essentially: if your customers don’t pay your factor, you’re responsible for collecting on the invoice and paying back your factor.
Nonrecourse factoring: Nonrecourse factoring is the opposite agreement, the factor is responsible for collecting debt from the broker’s customers if the customers don’t pay. This often comes with additional fees, qualification requirements, and a more difficult approval process.
Learn more about recourse vs. nonrecourse factoring here.
Rate confirmation: The documentation that confirms the terms agreed upon between the broker and carrier, including dates, rate and payment terms, shipper and carrier details, etc. When submitting an invoice for factoring, you’ll need to provide this information to the factor.
Working capital: Your working capital is the money that is currently available to use for upcoming business expenses.
While the tax implications of freight factoring seem complex, most of the income you receive from factored receivables is generally considered ordinary business income. Your business is simply receiving it early compared to when it would have been paid by your customers, minus a fee. This income is reported in the same way as any other income your business receives.
One of the tax benefits of factoring freight brokers is that factoring fees, interest, and costs associated with factoring are considered business expenses and are generally tax-deductible. In some cases, U.S. brokers will use factoring companies that are overseas, which can create a more complicated tax situation for the broker.
It may make sense for your brokerage to structure factoring agreements to change the date when income is received by your brokerage or to maximize tax benefits. These situations are complex and broker-specific, consider consulting a tax strategist for personalized advice.
One common pitfall for brokers is treating factored invoices like a loan instead of a sale of assets (your invoices/accounts receivable). Income from factored invoices is treated as regular income, minus any factoring fees or interest payments. Failing to report factored income can lead to costly penalties and fees down the road.
Do I need to pay taxes on factored invoices?
Yes, factoring your receivables is income that you will need to pay tax on.
Are factoring fees tax deductible?
Generally, yes. Factoring fees and interest payments are tax deductible.
Are there different tax considerations for recourse and nonrecourse factoring?
In most cases, no. Recourse and nonrecourse factored receivables are treated as regular income. The only difference is if a customer defaults on their debt, in which case that debt may be written off by whoever owns it.
What happens to my taxes if I factor an invoice at the end of the year that isn’t due until the new year?
Generally, you will owe tax on income in the year it is received. So if you received cash from your factor in 2023, you’ll owe tax on that income for the 2023 tax year.
Who sends 1099s to my carriers?
It's the broker's responsibility to send the 1099 to carriers, but it is not legally required. The Income Tax Regulations, under Section 1.6041-3(c), provide an exemption for freight payments from the requirement of 1099 information reporting. This exemption specifically pertains to the reporting of payments made for services involving truck, rail, ship, and air freight..
Ready to start using tech-forward factoring that gets your brokerage access to the capital you need, when you need it? Learn more about factoring with Denim.
The guidance we’ve outlined here may change based on your specific business, tax situation, and other factors. Consult your tax advisor for tax recommendations specific to your business.
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We are thrilled to announce Natalie Schick, Co-Founder and President of Alliance Logistix, as the winner of the 2023 SmartBroker of the Year award. This accolade celebrates freight brokers exemplifying the SmartBroker ethos of relentless improvement and growth over the past year.
A SmartBroker represents the vanguard of modern freight brokerages, employing cutting-edge logistics technology and innovative business practices. They are logistics mavens, utilizing technology to achieve operational excellence and forge strong relationships with their shippers and carriers. Above all, SmartBrokers are agents of change, embracing and driving the industry's transformation.
"Natalie's work at Alliance Logistix sets a new benchmark for today's freight brokers, and she is undoubtedly the most fitting choice for this award," said Bharath Krishnamoorthy, CEO and co-founder of Denim. "Natalie has led her team to remarkable growth and efficiency gains. Her efforts in streamlining operations and increasing volume while maintaining exceptional service standards are why we are excited to honor her with this award."
Alliance Logistix, under Natalie's leadership, stands out for prioritizing long-term relationships with customers and carriers, maintaining an impressive average relationship duration of eight years or more. This focus on relationship-building enables carriers to make informed business decisions, enhancing their fleets and operations while fostering strong broker-carrier relationships. Alliance Logistix is also noted for its strategic partnerships with tech industry leaders, resulting in a diverse and effective technology stack. This approach has earned them one of the industry's highest load counts per capita.
Natalie's response to the accolade was one of gratitude and vision: "Receiving the 2023 SmartBroker of the Year Award from Denim is a great honor. At Alliance Logistix, we believe in pushing boundaries to provide the most efficient and high-quality service. Our partnership with Denim has been instrumental in our growth, allowing us to focus on innovation and excellence in customer service."
This year's award is particularly noteworthy as Denim received triple the number of nominations compared to the previous year, reflecting the increasing recognition of the SmartBroker in the logistics industry.
The finalists for this year's award were:
Congrats to all the winners!
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Georgia is renowned as the logistics and transportation hub of the Southeast. Home to 85% of the world's top third-party logistics companies (3PLs), Georgia's freight network extends its reach far and wide. An impressive 80% of the U.S. market is accessible within a 2-hour flight or a 2-day truck drive from the state, highlighting its pivotal role in the distribution chain.
The heart of Georgia's logistics prowess lies in its world-class facilities. Hartsfield-Jackson Atlanta International Airport is the world's busiest and most efficient airport and features extensive cargo capabilities. With over 2 million square feet of warehousing space and a unique USDA-approved On-terminal Perishables Complex, it handles an astonishing 650,000 metric tons of cargo annually.
Complementing the airport's capacity is the Port of Savannah. Georgia's port is a leader in American-made exports and boasts 67 cold chain facilities encompassing 189 million cubic feet of space.
This article breaks down the facets of Georgia's freight market that make it a hotspot for 3PLs and freight brokers. From industry-driving sectors to emerging trends and strategic insights, we explore what makes Georgia an ideal landscape for logistics success.
Georgia's economy is characterized by growth and diversification, making it one of the leading economic centers in the Southeast. In recent years, the state has experienced significant economic development, marked by increased investment, job creation, and technological innovation.
Georgia is known for its business-friendly climate, which includes competitive tax incentives, a skilled workforce, and a strategic location that provides easy access to domestic and international markets. This environment has attracted many businesses, from manufacturers to multinational corporations.
Understanding Georgia's industrial landscape is crucial as you look to expand your business and diversify your client base. Keeping an eye on growing industries can provide new opportunities and help in strategic planning for business expansion.
Top 5 Industries By Number of Companies According to NAICS:
Georgia boasts a substantial manufacturing sector with 8,100 companies employing 476,170 workers. A significant portion of these companies, 12%, are publicly owned, and the same percentage imports raw materials. Notably, 25% of these manufacturers distribute their products internationally.
Atlanta, Georgia's largest industrial city, houses 679 manufacturers with 49,090 workers. Other key industrial cities include Dalton, Savannah, Gainesville, Marietta, Alpharetta, and Columbus.
Georgia's manufacturing landscape is diverse, featuring significant aeronautics, automobile manufacturing, and food processing players. These industries and cities are crucial to the state's robust industrial sector.
Below are the top industries by GDP according to Georgia Tech’s Manufacturing Extension Partnership:
Georgia's business-friendly environment attracts many companies to metro Atlanta and other parts of the state. Various businesses are opening headquarters, distribution centers, and customer service offices.
Here are some of the significant business moves happening in the area.
Atlanta's economy and freight market offers many opportunities for freight brokers and 3PLs looking to expand or diversify their business. Georgia's strategic position as the logistics and transportation hub of the Southeast, combined with its access to 80% of the U.S. market, provides an unparalleled platform for growth.
The state's robust manufacturing sector, including solid industries like food processing, transportation equipment, and chemicals, continues to drive demand for freight and logistics services.
With Georgia's economy experiencing substantial growth and the freight and logistics industry contributing significantly to the state's GDP, there is an apparent demand for efficient, innovative logistics solutions. The influx of new businesses and business expansions in the state further underscores the need for capable freight brokers and 3PLs to facilitate these operations.
Are you growing your Atlanta freight brokerage or trucking company? Need an Atlanta factoring company? Denim has your cash flow needs covered. With flexible factoring solutions, Denim can set you up for success in Georgia's growing market. Tap into the potential of this thriving economy and let Denim help you navigate the financial aspects easily. Learn how Atlanta-based Scale Logistics grew with Denim.
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As another year comes to a close, it’s time for freight brokers to take a look in the rearview mirror and analyze their financial situation. The freight markets of 2023 have been unforgiving, with spot load rates and volumes plummeting by nearly 50% compared to 2022. This ongoing drastic downturn has had a significant impact on many brokerage’s finances and cash flow.
With predictions for 2024 ranging from a miraculous rebound in Q2 to a long-term freight recession that could linger through 2025, it’s more important than ever for brokerages like yours to build a robust and resilient financial plan.
Without a solid plan, brokerages risk falling into common finance traps such as relying on receivables to sustain their operations, potentially jeopardizing relationships with carriers.
This guide will serve as a quick start to help your brokerage create sound financial structure and guardrails in your business, so you can endure next year’s volatility and come out on the other end more prepared than ever. Let’s dive in.
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Peregrine set out with a simple promise: pay carriers fast. They knew that looking after their carriers was the secret to top-notch customer service. But to make that happen, they needed to find a way to keep the cash flowing smoothly.
That’s where Denim stepped in. With their factoring service, Peregrine found the support they needed to keep their promise to carriers without stretching their resources too thin. Thanks to this partnership, Peregrine has managed to:
Jeremy Prince was at a crossroads when post-COVID challenges hit the freight market. He was at a large building materials distribution company, and carriers and drivers he'd worked with for years started to drift away. After several conversations, Jeremy got to the heart of the matter: they needed more services, including faster payments.
Determined to preserve valuable partnerships, Jeremy took matters into his own hands. He established a 3PL that benefited both his former employer and ensured carrier loyalty with the lure of quick payments and enhanced services. Jeremy’s initiative gave rise to Peregrine, a company committed to carrier relationships and reliable services for shippers.
Now, Jeremy's at the helm of Peregrine as CEO, steering a tight-knit crew of eight. He's got the big picture in mind, while Ashley Jackson, Sr. Manager of Shared Services, takes charge of the back-of-house—handling everything from ensuring carriers get paid on time to keeping the tech platforms running smoothly.
Peregrine is setting itself apart in the freight industry by taking a different approach. They are the "Anti-Broker," focusing on nurturing strong, respectful relationships with their carriers. For Jeremy, it’s simple: treat carriers well, and they’ll deliver exceptional service to the clients.
Making quick payments is not just a service feature; it's the backbone of their commitment to their carriers. This commitment, however, stretched their financial resources thin. Jeremy says frankly: “Our dedication to quick carrier payments put us in a tight spot. We were paying out so fast that our cash reserves were depleting quicker than we could replenish them.”
To address this cash flow challenge, Jeremy turned to Denim. The blend of flexible factoring, technology focus, and creative adaptability made Denim the easy choice.
Peregrine's partnership with Denim over the past two years has been integral to scaling their business to an impressive $12-15 million in revenue. A significant aspect of this growth is their lean approach to operations. “We’ve leaned on Denim to stay lean," Jeremy remarks, highlighting the critical role Denim's platform has played in streamlining their processes.
Before adopting Denim’s advanced factoring and freight payment system, Ashley handled each invoice manually. This involved downloading documents from their Transportation Management System (TMS), creating and sending invoices, and managing payments to carriers. With around 1,200 invoices processed monthly, this manual method was time-consuming and error-prone.
Leveraging Denim's platform has significantly cut down Peregrine's invoicing time. Thanks to the Zapier integration linking Denim and Shipwell, jobs seamlessly transfer from their TMS directly to Denim. This automation not only minimizes human error but also cuts down on costly mistakes. Impressively, Peregrine has tripled its efficiency in handling payments, reducing the time from 3 minutes per job to less than a minute on average.
Carrier relationships are central to Peregrine’s operations and value propositions to customers and new business. And paying them within 24 hours was a significant factor in creating Peregrine.
By leveraging Denim’s factoring, Peregrine can automate carrier payments and offer free quick pay.
“Our growth would not have been possible without our carriers. And Denim continues to be solid for us to continue our commitments to pay our carriers quickly,” said Jeremy
With Denim’s reliable carrier payments, Peregrine has one day to pay, no complaints, and an A rating on TruckStop. Because of Peregrine’s reputation, the team can easily find and attract quality carriers to cover last-minute loads.
Their reputation extends to one of their newest service offerings, managed fleets. Peregrine offers to manage shippers' carriers to alleviate communications and payment workloads. Usually, when Peregrine is introduced to a shipper’s carriers, the drivers are noticeably frustrated and anxious. However, Peregrine makes the operations more efficient and gets them paid faster. “Faster than what they were getting paid before.” And Denim is a “major portion of how Peregrine delivers on that value proposition,” said Jeremy.
Peregrine’s experience with Denim has redefined their expectations of customer service within the factoring industry. Ashley oversees their factoring partnerships and has lauded Denim for their exceptional support, often remarking on the speed to resolve issues. “If I have a problem,” she notes, “it takes 10 minutes to get an answer, and it’s fixed.” This responsiveness is a testament to Denim’s dedication to meeting Peregrine’s needs with urgency and precision.
A genuine sense of mutual respect and camaraderie further strengthens the partnership. The personal connection that Ashley feels with the Denim team is a stark contrast to the more transactional nature of other factoring relationships. Jeremy, too, acknowledges the depth of this partnership, pointing out, “Denim treats our trucking companies better than I think their own factoring companies.”
Peregrine's ambitions extend into significant areas of capital investment, notably in acquiring trailers and trucks to manage their own fleet. This strategic move into asset ownership reflects their commitment to growth and enhanced service delivery. However, such ventures come with substantial financial risks and complexities. In this critical phase of expansion, Denim's partnership proves invaluable.
Jeremy has clarified that the confidence to undertake such investments is rooted in the solid relationship with Denim. “There’s a genuine peace of mind with Denim as our partner. It takes the worry out of many things,” he reflects.
With Denim's factoring supporting positive cash flow, Peregrine can invest in their business with their own operational assets. The progression from broker to fleet manager is a bold leap that Peregrine is ready to make with Denim's steadfast support and financial acumen by their side.
Jeremy’s decision to start a 3PL stemmed from a deep-rooted commitment to his carriers—a pledge to fast payment and respect has been the cornerstone of their operational ethos.
With Denim's partnership, Peregrine has sustained this promise and achieved remarkable efficiency and growth. They've streamlined processes and bolstered their reputation, and now, with solid financial backing, they stand on the cusp of an exciting new chapter in fleet management and asset ownership.
Peregrine's trajectory is a testament to the power of strategic partnerships and the enduring value of putting people—carriers and clients alike—at the heart of business.
Are you ready to scale your brokerage? Schedule a demo to discover how factoring and Denim can boost your cash flow.
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Last year, we compiled end-of-year freight and logistics industry predictions. Our expert contributors offered insights that proved to be quite accurate.
In 2023, the freight market faced its share of challenges. We observed a sluggish market, an uptick in acquisitions and bankruptcies, and a strong push toward more efficient operations.
Now, what's in store for 2024? The experts are ready to share their forecasts, and if history is any guide, you’ll want to pay attention.
Back with a fresh set of predictions, our panel of industry veterans is armed with years of experience and an understanding of the nuances of the supply chain.
These professionals shed light on potential technological impacts, market shifts, and emerging trends. Read on to discover the key predictions for 2024 and how they might shape the landscape of freight and logistics.
“The freight markets are now 22 months into the freight recession. While truck capacity is returning to balance with more normal load volumes, a truly balanced and healthy market doesn't seem to be around the corner. I don't see many green shoots in the broader economy.
Freight cycles are hard to predict, and many start with a sudden shock to networks from the broader economy. We'll likely see another shock to the system (hopefully not as severe as a pandemic) that will kick off the next bull market. Hopefully this will happen in the back half of 2024. Fingers crossed.”
Owner of Brush Pass Research
“In my business, I have never been asked what my tech stack looks like by any of my shipper customers. I truly feel that automation is a great tool to utilize as long as there is core fundamental training behind the broker using the software. You cannot automate bad training, and I truly feel that shippers are returning to the basics of service & execution.”
Founder of Freight Coach
“In recent years, visibility has meant tracking. Connection has been transactional. Whether the connection is powering payment, tracking, or load tender and acceptance, it has been a bottoms-up transaction driven mostly by technology companies promulgating their specific solution.
2024 will see growing demand from shippers, brokers, and carriers for true trusted connections starting at the top of the value chain that brings together multiple parties operating in historically disparate digital environments. When we think about verified identity, rates, location + movement, risk management instruments, and settlements, those will still exist with separate vendors but streamlined in a connected ecosystem. This ecosystem we are building simultaneously pulls risk from any company's balance sheet and increases the speed of trade across many players dealing in the truckload sector.”
Chief Commercial Officer at Highway
“In 2024, shippers are expected to increasingly award lanes to freight brokerages that provide customized logistics solutions and significant value-added services. This shift is driven by the need for more adaptive and strategic supply chain management. Brokerages that excel in offering tailored services, such as advanced route analytics, real-time tracking, and sustainability initiatives, will stand out. This trend highlights a transition from transactional relationships to collaborative partnerships, where the ability to offer personalized, data-driven solutions is key to securing and maintaining business relationships with shippers.”
Lexi Farris
Sr. Sales Manager at Denim
“In 2023, approximately 88,000 carriers ceased operations, along with the closure of around 8,000 brokerages. Even as volumes tend to be higher than pre-pandemic levels, they cannot sustain the continued glute of capacity. The challenges posed by double brokering and freight fraud have undoubtedly contributed to the prevailing market conditions. As more carriers and brokers either shut down or have their authority revoked, a gradual reduction in overcapacity within the market is anticipated.
While it's unlikely that we'll experience a significant increase in Q1, given that it is traditionally a slower period after the holiday rush, I anticipate encountering some resistance, with tender rejections possibly rising at a higher percentage as we enter the Q2 produce season. The challenges in the industry are expected to persist into 2024, making it a demanding year.”
Thomas Werdine
Founder at ThinkFreight
“Many analysts predict the Fed will lower interest rates around May 2024.
My guess is this provides a short-term boost to the housing market because many of the potential buyers sitting on the sidelines will try to buy at once. Thus, more freight will be moved for things like renovations & new construction. The darker side is that the prices of single-family homes will shoot up.”
Demand Generation Manager at Denim
“As the freight market comes out of the doldrums, shippers may pay higher prices to ship their Freight later in 2024. Expect the next stage of the freight cycle to be harder on freight brokerages than shippers. Many shippers have started to prefer asset-based carriers in their routing guides, which has meant lost volume for brokers. Lower volumes mean lower margins for brokers. Consequently, many brokers with freight committed to contract rates will see their margins squeezed.”
CEO of EKA Solutions, Inc.
“Over the past five years, venture-backed digital brokerages like Convoy and Uber have set the pace for innovation in our industry. They’ve shown how technology can transform freight brokering, making it more efficient and transparent. However, the next phase of innovation will be dominated by SmartBrokers. These traditional brokers have deep-rooted industry connections and are now integrating advanced third-party technologies into their operations. This blend of relationship-driven business and tech-savviness will define the future of freight, offering a more holistic, efficient, and customer-centric approach.”
CEO and Co-Founder at Denim
"In light of the recent Panama Canal challenges, a stark contrast is evident: the LB/LA ports on the West Coast are witnessing historically high volumes while Houston and Atlanta experience lower volumes. This scenario fosters accelerated recessionary patterns in Houston and Atlanta, juxtaposed with stabilization or growth in the Southern California market. In response, surviving carriers will likely 'chase the money' across the country, adapting to these regional imbalances. Expect unusually rapid, region-specific shifts – both inflationary and deflationary – throughout the year, eventually leading to a general trend of nationwide inflation once the market corrects the current oversupply."
Co-Founder and COO at Alliance Logistix
“We’ve seen several brokerages this past year get into trouble with Asset Based Lines of credit, and as brokerages continue to experience drops in volumes and in rates the temptation to use that capital to fund operations will continue to grow. As interest rates remain at this high level, we will see brokerages turn to factoring as an added source of control and working capital.”
VP of Product at Denim
Navigating 2024’s market swings will require not just foresight but also flexibility. The insights from our experts paint a picture of a sector that's continually adapting to new challenges and opportunities. From technological advancements to economic shifts, staying ahead in the freight industry means being ready for anything.
One key aspect of this readiness is financial stability, and that's where factoring comes into play. In a landscape where cash flow is king, factoring can be a game-changer for freight businesses, especially those looking to adapt to the dynamic market conditions we've discussed. Whether you're dealing with slow-paying clients or looking to expand your operations, factoring offers a reliable way to keep your finances in check.
Are you curious about how factoring can benefit your business in 2024? Learn more about our flexible factoring solutions. Discover how you can transform your financial strategy to meet the challenges of 2024 and beyond.
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At F3, if 'oversupply' were a bet, you'd leave with pockets as full as a loaded freight container.
This November, the Chattanooga Convention Center didn't just buzz; it roared with discussions of market dynamics that had everyone from seasoned pros to newcomers perking up their ears. The Future of Freight Festival, set in the heart of Freight Alley, became a junction for the global freight community to dissect and debate the industry's hottest topics.
It wasn't the "Please Advise" hats or the splash of Hawaiian shirts that caught the eye—it was the enthusiasm for what's on the horizon for supply chains, the strategies for navigating unpredictable markets, and the emerging technologies set to redefine how we think about logistics.
In a conference rich with insights from brokers, carriers, and tech innovators, Sabrina Carr, the Director of Global Transportation at the Clorox Company, stood out by bringing the vital shipper's perspective into focus.
She zeroed in on three key metrics that she believes are crucial for supply chain efficiency: on-time pick-up, cost, and truckload utilization.
Sabrina highlighted the importance of on-time pick-up, explaining that being late can mess up a shipper’s operation. It’s a common problem that often leads to a blame game between shippers and carriers. Sabrina’s message was clear: better data helps us understand and solve these issues.
Regarding cost, the goal is straightforward – move goods as cheaply as possible without sacrificing quality or reliability.
Sabrina then delved into the critical measure of truckload utilization, underscoring the industry's drive towards maximal space efficiency with a simple yet potent phrase: "No one wants to pay for shipping air." This sentiment encapsulates a broader industry challenge as firms strive to optimize every aspect of transportation to combat rising costs.
Sabrina concluded with straightforward advice for those doing business with companies like hers: "Keep looking ahead. Be ready with solutions before problems arise. Those who help us think differently about our supply chain are the ones who add the most value. We're all about keeping things moving smoothly and costs in check."
Josh Phelan, SVP of finance and pricing at J.B. Hunt, and Craig Fuller, CEO of FreightWaves, didn't mince words in their discussion about the current state of freight markets and bidding strategies.
Their assessment was honest – the market isn't looking great. Josh drilled into critical metrics like rejection rates and the supply/demand ratio. He pointed out that we're not seeing the carrier drop-off needed to balance out the rates. Carriers are sticking around, even with spot rates as low as $2.21 per mile, which is longer than expected.
Craig drew parallels to the 2015 recession but with a critical difference: "The rates now swing much wider. We're seeing fluctuations roughly three times what we saw back then, making today's market especially tough to navigate."
But it wasn't all doom and gloom. Josh had practical advice for navigating these choppy waters during the bid season. His strategy? Begin with a clear customer-focused approach, setting out expectations from the get-go. Then, pivot to asking the customer what they need most. This approach helps create a customized pitch that can hit the mark.
A highlight at this year's F3 was the town hall with Brad Jacobs, executive chairman for XPO, Inc. Forgoing the usual script, he opened the floor to questions, addressing everything from business scaling to personal queries about making it with a modest start.
Here are key insights from the session:
Facing Problems Head-on:
He emphasized mental resilience in entrepreneurship: "When you're building a business, facing problems is inevitable. The key is to tackle them head-on and not let them take over. It's about mindset and staying level-headed through the challenges."
The Foundation of Scaling—People:
He shared that the secret to successful scaling lies in the team: "A company grows with its people. Look for individuals who are diligent, driven, collaborative, and honest. When you trust your team, and they trust each other, you can achieve remarkable things. It’s all about nurturing the right culture."
Understanding the Nature of Freight Brokerage:
He provided an insider's perspective on the industry: "Many assume that good times will last forever, but freight is inherently unpredictable. That's exactly why freight brokerage is essential—it thrives on market volatility, and that’s where it adds value."
Kendra Tucker, CEO of Truckstop, delivered a session rich in analysis, tackling the pressing issue of market oversupply. She underscored a significant challenge within the freight industry: the influx of new carriers, with an unprecedented 81,000 entering the market in 2021, signaling a need for market correction.
Kendra pointed to the financial success during the early stages of the pandemic as a cushion that has allowed carriers to weather the current oversupply. This resilience has delayed the market's natural rebalancing.
Highlighting the extremes in the market, she noted the anomaly of record highs in fraud and capacity without a corresponding drop in rates. "For the market to correct the oversupply, spot rates need to lower," she explained, indicating that a gradual market correction is in motion. The correction is seen in the uptick in bankruptcies this year, which exceed those seen in 2019, suggesting a shift may be underway.
The issue of fraud, exacerbated by the oversupply, was a focal point. Kendra revealed that Truckstop has been actively combating this rise in fraudulent activity, with thousands of accounts removed to uphold market integrity. In drawing a comparison to the role of credit card companies in e-commerce, she affirmed Truckstop’s dedication to safeguarding its users against fraudulent practices.
As the buzz of F3 fades into the rearview, the conversations don't end here. From the flood of 'oversupply' chats to the deep dives into tech's role in freight, the festival was more than just a meet-up; it was a think tank in motion. Our team left inspired, with our minds brimming with insights from the best in the biz.
Whether the casual catch-ups by the coffee stand or the intense strategy sessions, this year’s F3 reminded us that we’re all in this big, sometimes chaotic, but always moving world of freight together. So, until next year, keep those wheels turning, stay nimble, and let’s keep the conversation going. Because if there’s one thing F3 has shown us, it’s that the future of freight is a road we pave together.
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If you’re not flying to Chattanooga in November, you are missing out.
From November 7-9, 2023, the Scenic City will host the second annual F3: Future of Freight Festival. Set within the heart of Freight Alley and the birthplace of FreightWaves, the Chattanooga Convention Center will brim with experts, entrepreneurs, and leaders, all eager to share insights and spark conversations on the latest advancements and challenges.
Wondering which sessions to earmark? Here are three that you shouldn’t miss:
Every shipment has its demands, but what happens when those demands become uniquely challenging?
Ramona Hood of FedEx Custom Critical takes center stage to discuss these intricate dynamics. Her journey from an entry-level role to becoming the first Black female CEO of a FedEx operating company promises to offer inspiration and valuable insights into the nuanced world of special shipments.
Juan Meisel from Grip has a wealth of experience navigating the intricacies of specialty shipments. His expertise in crafting logistics solutions for unique demands, such as ButcherBox's premium offerings, will shed light on the world of niche freight. Join the discussion on creating robust systems that ensure product quality and customer satisfaction, even when the stakes are high.
China stands as a monumental player on the global stage, but deciphering its economic heartbeat can be a daunting task.
Leland Miller of China Beige Book International will demystify this, providing insights that span over a decade of research. His session promises to be an enlightening look into the subtleties and strengths of this economic powerhouse.
If you're attending F3, don’t forget to visit booth 11 in the main hall. Our team at Denim will be showcasing our latest AI-driven Invoice Audit and flexible factoring benefit. Plus, if you're up for a breather, challenge us to a round of foosball. We're keen to connect, share our innovations, and enjoy some friendly competition.
Mark your calendars for F3! See you there!
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Carriers, freight brokers, and logistics professionals converged in Houston, Texas, earlier this month for a sole purpose: growth. Even amidst a challenging freight economy, the FreightFest atmosphere radiated determination, resilience, and a commitment to evolve.
Our team from Denim experienced the spirit of FreightFest firsthand. Unlike other conferences, this event was laser-focused on growth through learning and networking. Every session was buzzing, with attendees diligently noting key insights and encouraging their peers. It wasn't just about absorbing knowledge; it was about fostering a community.
Let's dive deeper into some of the most impactful points from the conference:
"You want to make it so easy for someone to do business with you that they don’t have a choice." - Adam Wingfield, Founder of Innovative Logistics Group LLC.
Integrating technology into operations is no longer optional. Adam suggested using real-time cameras inside reefers, illustrating the proactive measures carriers can take. Such advancements make the process transparent for customers, allowing them to track their product conditions.
It's the age of convenience, and as rightly pointed out, even a hint of tech can edge out traditional advantages like being a family-owned business.
"Shippers are going to be more selective with brokers. They will look for a specific kind of service, and we will see service offering push farther and farther.” - Kyle Litner, Strategic Advisor vHub, Rocket Shipping.
It's about more than just successfully delivering a load but providing a 5-star experience. Shippers in an oversaturated market have a plethora of options. While competitive pricing is crucial, what will set businesses apart is the ease and efficiency of their service.
"We’re closer to the market shifting than not. If you know your business, you will attract the right business out there.” - Chris Jolly, The Freight Coach.
Awareness of market trends and a deep understanding of one’s business is pivotal. As observed in recent months, market dynamics have shifted. However, businesses attuned to their core strengths and market needs remain successful.
“Cold calling is the most effective way to develop business. You have to get on the phone. Make 10,000 calls in a few months.” - Desmond Clark, Bear Down Logistics.
And who said cold calling is dead? The personal touch of cold calling remains unbeaten in business development. The unanimous agreement on its effectiveness during the Broker Panel reinforces its importance.
"Building a successful business requires patience and adherence to four core principles: 1. Call or meet face-to-face as much as possible. 2. Believe in yourself and stay positive. 3. Showcase unwavering persistence and consistency. 4. Demonstrate resilience in the face of challenges. " - Tyson Lawrence, President and Founder of Diablo Freight Ventures
Relationships and trust don’t happen overnight. Patience is key. Staying positive, consistent, and pushing through tough times can set a broker apart.
"Step out of the role of being the all-star player to being an all-star coach to make my new team be all-star players.” - Kamard Johnson, CEO of GTT Commercial Tires
In the early stages of a business, CEOs often wear many hats, driving growth with their direct involvement. But as a company scales, successful leaders recognize the need to transition from being the leading player to a guiding coach. This shift is pivotal for sustainable growth.
To effectively make this shift, CEOs should prioritize hiring talent that aligns with the company's vision, empower them through trust and delegation, and foster open communication. This approach not only allows leaders to focus on broader strategy but also ensures that the entire team can evolve into all-star players, collectively driving the business forward.
"All markets have strong and weak cycles. Do not allow that to force you into fear or unnecessary decisions. The ultimate win in business is staying in business.” - Kamard Johnson, CEO of GTT Commercial Tires.
Market fluctuations are inevitable. Yet, enduring the ebbs and flows without succumbing to panic is the mark of a resilient business and business leader.
"You are the lid on your business's value-creating potential. The only way to remove the lid is to give your influence and authority away to your team.” - Spencer Tenney, President and CEO of Tenney Group.
To maximize growth, business leaders must transition from being the central figure to facilitating team potential. A company that's overly reliant on its owner can be vulnerable. By empowering and upskilling their teams, owners not only elevate their business's potential but also make it more attractive to potential buyers and investors.
"Play with those that want to play with you.” - Mitchell Ward, CEP of MW Logistics.
Choosing the right clientele is as vital as offering the right services. Time and resources are wasted on clients who aren't a good fit for your business model or values. Prioritizing clients who align with and appreciate your ethos ensures better collaboration, smoother operations, and increased profitability.
"We’ve reached 92% automation with accounting software. The goal is not to replace people. You want people to stay and continue to do good work.” - Mitchell Ward, CEP of MW Logistics.
Embracing technology shouldn't equate to sidelining human resources. Instead, automation should be viewed as a tool that alleviates routine tasks, letting employees focus on value-added roles. By optimizing processes, technology allows businesses to scale efficiently while preserving the integral human touch.
"We close our books in 3 days. Cash is so important. And make sure no one customer is more than 4% of the business.” -Mitchell Ward, CEP of MW Logistics
Maintaining financial discipline ensures business longevity and resilience against market fluctuations. Promptly closing books indicates efficiency. Ensuring no single client dominates the revenue stream protects against potential losses. This approach fosters diversification, buffering the business against unexpected downturns.
"Don’t be afraid to be redirected.” – Jorie Myers, Founder of Transportation & Logistics Clubhouse and Atlanta Dispatch
Change is the only constant, especially in dynamic industries like freight and logistics. While it's vital to have a direction, flexibility in responding to market shifts, technological advances, or client needs can open doors to innovative solutions and untapped market segments, fostering growth and sustainability.
These events aren't just about the latest in tech or business strategies. They're about the handshakes, the exchanged business cards, and the real conversations. In an era dominated by digital interactions, there's something irreplaceable about meeting face-to-face. Both industry veterans and newcomers walk away with fresh insights and meaningful connections. It's a testament to the enduring importance of coming together to share and learn.
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