Technology is changing the way freight brokerages operate

XPO incorporates AI and machine learning into brokerage

Digital brokerages have dominated headlines in recent years, but some old standbys continue to perform. And for some of them, like XPO Logistics (NYSE: XPO), the idea that digital brokerages represent a new way of moving freight masks the fact that many traditional brokerages have remained at the cutting edge, and even in the lead, of the digital revolution.

“We don’t think of ourselves as an incumbent broker,” Lou Amo, president of Freight Brokerage and Expedite at XPO Logistics, told FreightWaves. “We like to think of ourselves as one of the first digital brokers.”

Amo, who joined XPO in 2012 as vice president of brokerage operations, said the company has invested in technology “since day one.” Technologies such as XPO Connect and Drive XPO are just the latest iterations of technological achievement for the company as it strives to continue its leadership position among global brokerages (XPO is the second largest brokerage operation in the world) with an eye on being customer-centric with solutions.

Frost & Sullivan has predicted that Trucking-as-a-Service (TaaS), which includes digital freight brokerage, will grow from $11.2 billion currently to more than $79.4 billion by 2025. Digital freight brokerage alone will account for $54.2 billion of that, the firm said. That technological growth is important as freight brokerages moved 23% of all loads in the U.S. in 2018, according to Goldman Sachs.

Here Lou Amo’s full interview on What The Truck?!?

Technological innovation

During a special appearance on FreightWaves’ popular show What The Truck?!?,  Amo said technological innovation continues at XPO at a rapid pace with the brokerage business utilizing artificial intelligence and machine learning to create more visibility into pricing, capacity and tracking with the goal of driving customer value.

“We’re doing exciting things with our digital platform XPO Connect – automation, artificial intelligence and machine learning are at the core of XPO Connect – and in today’s environment, our largest customers are asking us for accurate, real-time pricing and committed capacity, and technology allows us to do that,” he said. “More broadly, XPO has been investing in technology since the beginning and technology is our secret sauce.”

First launched in 2018, XPO Connect, which now has more than 60,000 carriers globally on the platform, is used by shippers to track and trace their shipments, request a quote and manage their spend with XPO. Along the theme of continued advancement, XPO has continued to add features to the platform, including last-mile deliveries in late 2019.

Amo said XPO Connect is an example of how the company is combining automation and artificial intelligence into a customer-driven solution. The platform allows users to find capacity and book loads, plan future moves to reduce empty miles, and increase visibility and overall control of the supply chain through insight into engagement metrics and tracking tools.

Technology is allowing more of this process to be automated. At XPO, Amo said a typical transaction may require 10 pieces of information, and “90% of our orders have at least one automated piece of the transaction.”

Real-time insights

XPO Connect, with the goal of automating brokerage from end to end, is continuing to evolve and now includes “high levels of integration with customer transportation management systems.”

“That integration allows us to provide real-time pricing and tracking information through APIs, and we leverage machine learning to make sure our pricing and capacity algorithms are getting smarter all the time,” Amo said.

We don’t think of ourselves as an incumbent broker. We like to think of ourselves as one of the first digital brokers.

Lou Amo, president of Freight Brokerage and Expedite at XPO Logistics

Brokerages have to manage both ends of the transaction, though, and ensuring carriers are equally efficient goes a long way to creating a more effective supply chain. To meet that need, XPO developed the Drive XPO app, which has been downloaded more than 150,000 times, to integrate with XPO Connect.

“Drivers use the app to bid on transactional freight and dedicated freight; they can submit paperwork and receive payments electronically; and they can do all this from their trucks if they want to,” Amo said.

Drive XPO includes several customer-focused features, including the ability for counter-offers when bidding. The functionality generates digital counter-offers to carrier bids that are not accepted, based on real-time market conditions as determined within the XPO Connect platform. Users can also see load details including pickup and drop-off windows, locations, equipment and handling requirements, and rate per mile. Track-and-trace capabilities eliminate the need for check calls and carriers/drivers with available capacity can post that through the app to receive automatic load recommendations.

Dedicated brokerage resources

Technology is just one tool, though, as Amo noted the additional resources XPO has thrown at brokerage over the years.

“We have dedicated resources and a team focused on carrier integration,” he said. “There is not one magic bullet. We integrate with carriers through API, EDI, direct to ELD devices, and we use cellphones for our app. One area where integration tools have really paid off is in real-time tracking. Our auto tracking functionality is up over 60% year-over-year.”

Brokerages need to think about technology in a way that enables them to benefit customers, not only themselves, though. “When we think about digital, we’re constantly focused on automation and productivity to benefit our customers and carriers,” Amo said.

And while XPO and others have pushed the technological boundaries, the current COVID-19 pandemic has underscored just how important continued advancement of technology is to the future.

“Tech is more than an initiative for us; we see technology as the future of the industry,” Amo said. “Today with COVID-19, it’s driving customers to rethink their supply chains and visibility and touchless transactions. The intelligent technology is building momentum because the customers are demanding it.”