While some truckload carriers tend to treat their brokerage operations as hobbies or support functions, Chattanooga-based Covenant Transport (NASDAQ: CVTI) is committed to fostering a relevant and prosperous brokerage firm with Covenant Transport Solutions. New hire Ben Caplenor, vice president of customer service, plays an integral role in that mission.
Caplenor’s background includes eight years as director of customer service for the brokerage division of Chattanooga-based U.S. Xpress (NYSE: USX). Prior to joining U.S. Xpress, Caplenor ran his own brokerage agency in Nashville, Tennessee. All in all, he has racked up 20 years of experience in truckload and less-than-truckload logistics.
“It’s no secret that a lot of truckload providers don’t focus on brokerage as much. A lot of them are an afterthought, but we’re investing in the growth of the Solutions division,” he said. “We have aggressive growth plans coming up, so here it’s not a hobby or an afterthought. It is something we’re focused on, and it’s going to be a relevant division within this corporation.”
That growth plan includes further developing the team that is already in place, as well as making strategic hires throughout the rest of 2018 and into 2019, according to Caplenor.
“We’ve got to create more efficiency, and we’re going to be focused on that, but first and foremost, it is going to be about customer service,” he said. “We feel that if we lead with service, everything else will fall into place.”
When Caplenor said Covenant was investing in the Solutions division, he was not just talking about money. He was also talking about space, systems, technology and other resources required to run a successful brokerage.
One big way Covenant is investing in Solutions is by securing new office space, just for the brokerage firm, in downtown Chattanooga.
“We will be creating our own space downtown, allowing us to further develop the brokerage culture while complementing our corporate culture,” Caplenor said.
More details about Solutions’ move into a new building are expected to come in early 2019.
In his two decades of experience, Caplenor has found that there are a couple key factors that set brokerage divisions of asset-based carriers apart from standard 3PLs: Confidence and brand recognition.
“When I say confidence, I mean we have support from our fleet in times when we can’t find or create capacity. We have the comfort and the confidence of being able to say yes and knowing that if we do run into hard times and can’t create the right capacity to service our customer, we have a lot of assets we can lean on,” he said. “We have over 3,000 assets on the road today, and it gives us some comfort knowing they are there to help in anyway possible and, depending on the situation, will jump right in.”
Built-in brand recognition is also a significant perk for brokerage divisions of asset-based carriers. The firms do not have to start from scratch, and being attached to a well-known name in the industry can inspire confidence in customers.
“To me, that’s a huge hurdle when you’re a non-asset provider starting up, to break that ground and get people to understand who you are and what you’re about,” Caplenor said. “With an asset-based company, especially one like Covenant, you have the brand recognition, which opens a lot of doors.”
Earlier this week, Truckload Indexes reported that brokerage revenues dropped at asset-based carriers as the market deteriorated between June 2018 and August 2018, according to Truckload Carriers Association data and DAT spot rate data housed inside FreightWaves’ SONAR.
While the drop was significant, and recent data shows this market softening continuing into the fourth quarter, Caplenor was not overly concerned with the trend.
“It’s not necessarily a concern for me here, as we have a lot of bandwidth within our current customer base. We still have a lot of runway ahead of us and a lot of developing to do with our current opportunities,” he said. “Brokerages typically do really well in times of high capacity demands and when there is lots of capacity available. Obviously it’s something that we’re watching, but we’re really excited about the opportunities that we have in-house and further developing our current customer base while continuing to add new opportunities.”