As a well-established 3PL in the transportation management and brokerage space, Chicago-based Echo Global Logistics has proved that focusing on customer relationships and strategy is the best way to navigate a freight market downturn.

Zach Jecklin, chief information officer at Echo, has been with the company 17 years and has experienced every part of the market cycle.

“We’re ready for a tailwind,” Jecklin said. “It’s been a long bottom part of the market, for longer than we’ve seen in the history of tracking these cycles.”

According to Jecklin, the lowest dip in the market is a natural consequence of the highest peak.

“It makes sense that it took awhile for some of that additional capacity to come out of the marketplace and for things to renormalize, with rates finally showing signs of increasing,” Jecklin said.

When the market flips, the Echo team is poised to take advantage of ideal conditions due to their strategy during the tougher times.

“At Echo, we’re ready to be flexible in any market, and we plan for this,” Jecklin said. “We know how to operate at any point of these cycles, so we can continue to strategically take market share and grow profitability during the low points.”

“Previously, we’ve seen one or two bid cycles in a downturn, and now we’re seeing three or four bid cycles,” Jecklin added.

Echo believes the best way to navigate these cycles is through industry relationships.

“How you manage relationships and service to your largest shippers and carriers while managing costs determines how strong you come out of the downturns,” Jecklin said. “This industry is operating on a relatively thin gross margin, so this takes careful planning.”

For most 3PLs, this cycle has been exceptionally challenging in its length and depth.

“What’s differentiated Echo through this cycle is not just our best-in-class technology, it’s the fact that we have some of the best people in the industry with history and experience to maintain excellence through even the most challenging and unique circumstances,” Jecklin said.

The shifts occurring in the freight market coincide with the introduction of new technologies, most notably the integration of AI into data management and analytics.

“It’s not all hype,” Jecklin said. “There is going to be a lot of value from AI, and there already has been, going back as far as the last 30 years.”

Generative AI and consumer-facing applications like OpenAI are relatively new and have raised the conversation in the public sphere, but Jecklin said AI is something Echo has been using and integrating for a long time.

“The most interesting part of the hype now is that people are talking about the future of AI generically across all industries, from individual contributors to executive boards,” Jecklin said. “People tend to lump the topic together as ‘AI,’ but we have to be clear about use cases and applications because it can be very contextual.”

“At Echo, what we’re focused on is not rocket science,” Jecklin said. “AI for self-driving trucks, cancer detection or surgery assistance is advanced science. You might have to invest billions of dollars into that, and it’s life or death if you don’t get it right.”

“That’s not what we’re doing to leverage AI,” Jecklin said. “We’re automating email processes or phone calls, shaving 30 seconds off a task that we do thousands of times per week.”

Echo focuses on using relatively inexpensive, open-source software, whether off-the-shelf or custom-built technology, without the heavy investment of specialization like some industries require.

“We’re focused on finding the valuable use cases where AI can improve what we do, not investing in entirely novel science,” Jecklin said.

That translates into a value-add to the customer in a variety of ways, according to Jecklin. “In the long run, what matters most to us as a broker is the service level we can provide to shippers and carriers – taking care of our partners and customers and providing for their needs,” Jecklin said. “To do that, there’s a lot of ways AI can cut through the noise to provide more efficient service.”

In Echo’s case, cutting through excess data and email communications is a cost-effective way of leveraging AI. The company sees millions of emails come in and out of its platform every week, and while many of those emails contain vital information, others are extraneous noise.

“By leveraging AI to categorize data, prioritize important emails and deliver automatic notifications, we significantly enhance the customer experience,” Jecklin said.

Trucking is a unique industry with thin margins per transaction, and many touch points throughout the transaction life cycle. 3PLs as large as Echo can drive material profitability by creating small efficiencies within that life cycle.

“You either need a person or a process for each of those,” Jecklin said. “With AI, we can find the right spots to automate a task completely or provide a more streamlined workflow for our people.”

By automating the more mundane tasks and sifting through the noise with AI, Echo’s sales and operations staff can spend more time focusing on relationships, resulting in moving more freight with the same or fewer number of people – both of which are good for the bottom line.

While some companies are facing backlash from employees for automating certain processes and eliminating roles, Jecklin said the buy-in so far has been great within Echo’s organization.

“We’ve taken a crawl-walk-run approach,” Jecklin said. “We don’t have the mindset that using AI will automate everyone’s job. We’ve seen competitors come and go that have tried to automate everything, and that’s never been our strategic approach. For us, it’s about finding the right tasks that make our people more efficient so that they can specialize in what they do best.”


.

The post Focus on relationships is the key to navigating market downturns appeared first on FreightWaves .