U.S. Xpress is giving its brokerage arm a makeover. The carrier announced last week it plans to create a new business unit, called Xpress Technologies, "to build and scale a digital freight marketplace."
"A robust digital brokerage capability has become an increasingly vital component of our long-term growth strategy," Eric Fuller, president and CEO of U.S. Xpress, said in the announcement.
Transport firms have been pouring investment into their brokerage businesses — a segment many perhaps have historically considered secondary. As freight has boomed in recent months, XPO Logistics, Knight-Swift, Schneider and U.S. Xpress have reported brokerage as one of the main beneficiaries.
"The truck brokerage market is white-hot," XPO CEO Bradley Jacobs said in an earnings call in May.
Tech fuels 'growth, growth and more growth' in brokerage
XPO's revenue in brokerage was up 83% YoY, while net revenue was up 132% YoY, Jacobs said.
"In truck brokerage, the story is growth, growth and more growth. Three months ago, we reported a record fourth quarter for our brokerage business, and now we've driven results higher to top it with another record quarter," Jacobs said on the call.
Brokerage revenue per load for Knight-Swift also showed a surge in demand. In Q1, it increased 43% YoY, and the company matched 4,500 carriers through its digital platform called Select, which represented 20% of brokerage load volume.
Digital freight brokerage has been on the rise for years. In 2019, Frost & Sullivan estimated the market would reach $54.2 billion by 2025. The detailed footprint of digital transactions offer greater visibility and, therefore, greater ability to analyze data and identify pain points.
Jacobs said XPO Connect is "the big driver" behind brokerage performance. The platform has enabled the business to handle 41% more volume with a 3% increase in headcount over the last five years, he said.
"The truck brokerage market is white-hot."
CEO of XPO Logistics
Schneider's relatively new FreightPower platform is booking "several hundred orders per day" for its brokerage unit — a segment that "benefited from truckload synergies in the quarter," CEO Mark Rourke said on the company's Q1 earnings call. FreightPower for carriers launched in 2020, while FreightPower for shippers launched in Q1 this year.
U.S. Xpress' digital platform handled 67% of brokerage transactions in Q1, compared to 15% in Q1 2020, Fuller said during an earnings call in April.
"This tech-enabled platform allows our team to scale our brokerage business as revenues rapidly grow," Fuller said.
Revenues in the segment increased 62% YoY, thanks in part to the platform. The brokerage arm reached operating income of $1.3 million, up from a loss of $4.9 million during the same quarter last year.
Bringing in outside talent
Bringing in outside help through acquisition, hiring or contracting is a favorable option for those who don't have in-house expertise.
J.B. Hunt announced in February it agreed to a multi-year partnership with Google Cloud to expand its brokerage platform, J.B. Hunt 360.
The carrier and Google said the partnership will focus on three areas: Bringing consistency to J.B. Hunt's multicloud strategy, offering predictive analytics to J.B. Hunt 360 users, and developing new products, including solutions for real-time visibility and predictive modeling.
U.S. Xpress said the creation of Xpress Technologies stems back to its April 2020 acquisition of "a small technology company" with a scalable platform for handling brokerage transactions, which it integrated with its existing brokerage.
"In truck brokerage, the story is growth, growth and more growth."
CEO of XPO Logistics
"Coupling a purpose-built technology stack with a focused and financially disciplined growth strategy has helped improve recent performance for this business unit," the company said.
The Xpress Technologies business unit is led by President Joel Gard, who came over from Coyote Logistics. U.S. Xpress said he's now in charge of working with "new and diverse talent from within and outside the transportation industry."
"With Xpress Technologies, we’ve made significant investments in talent and tech that will bring greater visibility, efficiency and flexibility for shippers and carriers alike," Fuller said.