As an established transportation management and brokerage 3PL, Chicago-based Echo Global Logistics has proven 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 for 17 years and has seen every part of the market cycle.
“We’re ready for the tailwind,” Jecklin said. “It’s been a bottom part of the market for a long time, longer than we’ve ever 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 a while for some of that extra capacity to come out of the market and for things to normalize again, with interest rates finally showing signs of rising,” Jecklin said.
When the market turns, the Echo team is ready to take advantage of ideal conditions thanks to their strategy in the tougher times.
“At Echo, we are ready to be flexible in any market, and we are planning for that,” Jecklin said. “We know how to operate at every point in these cycles so that we can strategically continue to capture market share and grow profitability during the lows.”
“Previously we’ve seen one or two bidding cycles in a downturn, and now we’re seeing three or four bidding 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 will determine how strong you emerge from the recession,” Jecklin said. “This sector operates with a relatively small gross margin, so this requires careful planning.”
For most 3PLs, this cycle has been exceptionally challenging in length and depth.
“What has differentiated Echo throughout this cycle is not only our best-in-class technology, but the fact that we have some of the best people in the industry with the history and experience to maintain excellence even under the most challenging and unique circumstances ” says Jecklin. said.
The shifts occurring in the freight market coincide with the introduction of new technologies, especially the integration of AI into data management and analytics.
“It’s not all hype,” Jecklin said. “A lot of value will come from AI, and that has been the case for the last thirty years.”
Generative AI and consumer-facing applications like OpenAI are relatively new and have fueled 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 across all industries, from individual contributors to boards of directors,” says Jecklin. “People tend to lump the topic together as ‘AI’, but we need to be clear about use cases and applications because it can be very contextual.”
“At Echo we don’t focus on rocket science,” Jecklin said. “AI for self-driving trucks, cancer detection or surgical assistance is advanced science. You may have to invest billions of dollars in 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 automate email processes or phone calls, saving 30 seconds on a task we perform thousands of times a week.”
Echo focuses on using relatively inexpensive, open-source software, whether off-the-shelf or custom-built technology, without the heavy investment in specialization that some industries require.
“We are focused on finding valuable use cases where AI can improve what we do, rather than investing in entirely new science,” Jecklin said.
According to Jecklin, this translates into added value for the customer in various ways. “In the long run, what matters most to us as a broker is the level of service we can provide to shippers and carriers: we take care of our partners and customers and meet their needs,” Jecklin said. “To do that, there are many ways AI can cut through the noise and provide a more efficient service.”
In the case of Echo, cutting out excess data and email communications is a cost-effective way to deploy AI. The company sees millions of emails coming in and out of its platform every week, and while many of those emails contain vital information, others are unnecessary noise.
“By using AI to categorize data, prioritize important emails and deliver automatic notifications, we significantly improve the customer experience,” said Jecklin.
Freight transportation is a unique industry with small margins per transaction and many touchpoints throughout the transaction lifecycle. 3PLs as large as Echo can drive materials profitability by creating small efficiencies within that life cycle.
“For each of those, you need a person or a process,” Jecklin said. “With AI we can find the right places to fully automate a task or provide our people with a more streamlined workflow.”
By automating the more mundane tasks and cutting 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 people – both of which is good for the operating result. .
While some companies face backlash from employees for automating certain processes and eliminating roles, Jecklin says buy-in has been great within Echo’s organization so far.
“We took a crawl-walk-run approach,” Jecklin said. “We don’t think that using AI will automate everyone’s work. We’ve seen competitors come and go who have tried to automate everything, and that has never been our strategic approach. For us, it’s about finding the right tasks that make our people more efficient, so they can specialize in what they are good at.”
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