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Brokers face a more complex decision-making process when putting customers on the rails

As George Abernathy, the chief revenue officer of FreightWaves—and a former president of Transplace, which was represented on the panel by Tom Sanderson, its executive chairman—said, truck traffic that would be “overflow” generally was “handed off to intermodal.” “But that is not as available today,” he said., said if a shipper wanting to use intermodal had not booked some sort of dedicated rail capacity in the current market, they would be looking at spot rates that are up almost 50% year-on-year.
The question, though, is whether a shipper that traditionally has been dependent upon truckload movement can be flipped to moving the business to intermodal if a broker seeks to do that. A broker might tell a shipper that they can convert a truckload shipper to rail and “save them a couple of hundred bucks,” but as the discussion on the panel made clear, a switch to the rails shouldn’t be pursued just for that small savings.
With the recent problems on the rails, even with higher fuel prices and light truck markets, some shippers are moving away from rail and back to trucks. Gore said conversions earlier this year to rail from the road were a “fairly easy sale.” But in the last three months, as rail service stagnated or got worse while trucking rates stabilized—albeit at high levels—transitioning back to the road from the rails was “a little easier for us.”Sanderson noted one area where intermodal has a clear advantage: international business, primarily into Mexico.
The miles traveled are long and getting across the border is a lot easier for a train than a number of trucks. The work of a broker in the intermodal business is far more complex than what that role must do to put a truck on the road. As Menzel said, “many brokers and third parties today don’t have the knowledge of all the moving parts.” It can become a particular problem when detention and demurrage charges pile up at a rate far greater than one might encounter in the trucking side of the transport. “Customers like to receive them even less than we like to pass it on,” LaForge said. Any discussion of brokerage inevitably turns to a question: as technology advances, what’s going to become of voice brokers, whether they’re booking intermodal or a straight truckload run? Evan Armstrong, the moderator of the panel and the president of consulting firm Armstrong & Associates, which specializes in work related to brokerage, said all the focus on apps and digital tools that pass the broker are overlooking the possible role of artificial intelligence. And a lot of that AI is already an existing brokerage house and not in the hot startups being funded by Silicon Valley. Armstrong told of one AI developer that is working with mid-sized brokers—he did not identify it by name—that can read unformatted email truck lists and unformatted emails from shippers requesting trucks in certain lanes and can do it to as much as 98% accuracy.

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