Fixing What’s BrokeredTransformative Trends

Within Freight Brokerage

w w w . c a r g g o . c o mi n f o @ c a r g g o . c o m

0 1i n f o @ c a r g g o . c o m

A few short years ago, it was difficult to imagine freight “going digital” at all,

particularly its more transactional components. But it should come as no

surprise given the rate at which brokers, serving as intermediaries, have been

replaced by technology elsewhere in the global economy. Intermediaries, who

rely on maintaining opacity and preventing the free flow of information in

order to keep themselves relevant, have been in decline for some time now,

particularly in reference to individual consumers conducting simple,

standardized transactions.

The age of brokers acting as a barrier is coming to an end. Technology is

allowing freight to become more transparent and transformative than ever.

Here, we’ll discuss the current state of brokerage within the freight industry

and how technology is giving brokers a run for their money…

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Let’s put this in perspective… What do

people do when they want to add

another blue chip to their portfolio,

book the cheapest non-redeye ticket

across the country or obtain auto

insurance compliant with state law?

They utilize technology-enabled,

self-service. Why? Because these

platforms are faster, they are easier, and

neither their fees nor incentives are

shrouded in opacity.

Schwab receives its $4.95 flat fee for

every stock trade. Orbitz offers tickets at

the same price as the airlines do

directly. And Progressive will show not

only its own insurance rates but those of

competitors as well. In this world, why

would anyone ever choose to deal with

a (non-fiduciary) broker, likely

prioritizing their own interests, again?

Nearly every industry imaginable is

looking at any sector that involves

brokers and seeing how they can

efficiently eliminate them with

cost-efficient software and technology.

The Disruptionof the Middleman

Per consultancy A.T. Kearny: Disruption through

disintermediation

of middlemen is all

the rage in Silicon

Valley with startups

in many legacy

industries building

business models

around it.

“

0 3i n f o @ c a r g g o . c o m

Saying Goodbye to OpaqueBrokerage Within Logistics

Now, the logistics industry has this same opportunity. Even a

half-decade ago, it was difficult to fathom the rate at which the

industry would begin adopting technology solutions. But

companies are raising tens, even hundreds, of millions of dollars

to implement digital visibility and transportation

management solutions, with VCs lining up to fund them.

In a few years, the industry will likely be virtually unrecognizable,

and completely digitized, making this a critical time to stay

up-to-date.

For a look at transformative trends, particularly those around long-term

alignment of interests and incentives, the same A.T. Kearny report referenced

earlier makes an astute observation:

For an even more alarming wakeup call, consider Accenture’s take on those

who embrace, as opposed to ignoring (or even fighting) a technology-enabled

logistics operation:

Accenture concludes with a concise summary of the current trend towards a

broker-free future: “After all, if you could make your own shipping

arrangements on one web-based central platform, without recourse to a

broker, why would you hesitate to do so?”

The report goes on to discuss the coming irrelevance of historical industry

staples, due in large part to technology:

In 3PL, customer-vendor relationships still focus on short term cost-cutting, rather than long-term strategic partnerships with advantages for both sides. Technologies underpinning the fourth industrial revolution may encourage such partnerships.“Still mired in largely manual and heterogeneous processes, supported by a variety of different tools, most of the industry’s incumbents simply can’t compete.“Platform-based, online marketplaces can now connect shippers directly with both Logistics Service Providers (LSPs) and carriers… Shippers with less complex shipments can easily switch to the new, platform-based services. Carriers, meanwhile, can use the online marketplaces to conduct business directly with shippers.“

0 4i n f o @ c a r g g o . c o m

No matter the perspective – shipper or carrier, individual or enterprise, producer

or consumer, human or software – the answer is the same: it is time to move

trucking into a technology-driven, disintermediated future. The costs, both

direct and indirect, of an antiquated brokerage model have become too great to

accept, let alone ignore.

Indeed, according to Ernst & Young:

Given the pace of rapid technological advances, it is easy to lose sight of the

bigger picture. If incumbents fail to innovate and capitalize on the emerging

technologies, they will miss out on the new market opportunities.

A Disintermediated,Technology-Driven Future

So, where does this leave us?

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0 6i n f o @ c a r g g o . c o m

The fact that brokers insert themselves in between naturally aligned partners

should alone be cause for concern. Yes, the industry’s fragmentation dictates

there be some external method of connecting shippers and carriers, but it is of

vital importance that it respects the natural alignment of interests between the

two. Creating value by tightening that fragmentation, rather than seeking

opportunities to exploit holes in it, is the way of the future.

Such fundamental change can be daunting, even overwhelming, but the truth

is it is not as unfamiliar as it may seem. Disintermediation has already impacted

each and every one of us as a consumer, and most would argue for the better.

Its B2B potential is now being unleashed, and logistics will be the next industry

to experience it. Keeping in mind the realities of the industry, however, it is

important that disintermediation solutions not negatively impact the

commercial and legal protection associated with utilizing fully licensed brokers

(from a legal and regulatory, not functional, perspective).

The sustainability, both of our businesses and our planet, is also at stake.

Fragmentation, rather than laziness or malfeasance, is largely to blame for an

inability to more efficiently utilize shipping resources. But no matter the motive,

the problem remains the same: broker-based transactions magnify the effects

of fragmentation. The impact will only grow unless we take collective action.

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Carggo: A Force in the Disruption of the Freight Brokerage Industry

INTERMEDIARIES

Legacy Digital

Incentivized to prioritize margin, at shipper’s and carrier’s expense

Alignment, not arbitrage

Full pricing & execution transparency

Firm price commitment

End-to-end automated freight management

No price transparency.Limited price commitment.

No price transparency.Limited price commitment.

Manual transaction management Digital transaction management

“Epitome of obsolescence” “Digitizing legacy brokerage”

Incentivized to reduce human error, focused on growth & margin expansion

The future offreight logistics

0 8i n f o @ c a r g g o . c o m

Carggo is a modern, robust, purpose-built technology platform to create, manage and execute shipping transactions.

At Carggo, we believe in restoring the natural alignment in the shipper-carrier relationship, rather than driving a wedge between partners in commerce. By combining cutting-edge technology, an industry-first business model, and a superior user experience, the Carggo platform does just that. While brokers frequently pair suboptimal loads and trucks (serving primarily their own interests), Carggo wants to see freight move as efficiently as possible.

Rates and availability shippers rely on.Simplicity and convenience they love.

Shipper

Equitable transactions make carriers a

meaningful part of the logistics equation.

Carrier

INSTANT, FAIR,ALGORITHMIC PRICING

INTUITIVE DIGITALEXPERIENCE

GUARANTEED EXECUTION

Equitable transactions make carriers a meaningful part of the logistics equation.

Carrier

INSTANT, AUTOMATICPAYMENTS, TRANSPARENT FEES

OPTIMAL LOADS BASED ON PREFERENCES

SUPPORT WHEN YOU NEED IT

0 9i n f o @ c a r g g o . c o m

See how Carggo can help you fulfill yourcontract and spot needs.

Real-timePricingEngine

Automated Carrier

Assignment

Automated Tracking &Payment

Integration with Major ERP &TMS Systems

X 4.3

MOREEFFICIENTPER FTE

OF ALLSHIPMENTS ARE“ZERO TOUCH”

70%

https://www.carggo.com/shippers