Digital brokerages have played an important role in the technological revolution of the transportation industry. Their disruptive innovation has challenged legacy players to take a step back and analyze the value of their current service offerings and motivate them to invest in bringing true capacity optimization and efficiency to customers, both carriers and shippers.
This revolution can be intimidating to the thousands of brokers looking to bootstrap their way into the digital era. From startups like Loadsmart, raising over $146 million, to legacy players like C.H. Robinson, setting aside $1 billion to create its in-house incubator, the path to digital success only seems possible if driven by venture capital and private equity, often with no profit to showcase.
However, bootstrapping brokerages, like Florida-based Surge Transportation, are finding that creating your own digital path is possible.
On Thursday, the company announced that it has fully integrated itself into a digital brokerage, now one of only a handful to be completely integrated with legacy transportation management systems (TMS) Blue Yonder, MercuryGate, Oracle (NYSE:ORCL), BluJay and Kuebix.
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Surge organically began to lean into the digital mentality as it became a necessity to work with its enterprise customers. As each customer had its own needs for integrating into its legacy systems, founder and President of Surge Omar Singh realized it could make this transition easier by focusing on building strong connections with TMS, which many customers were already familiar with.
“I realized that the better play is to do TMS partnerships. So it is one integration that comes with 100 to 200 customers instead of just one,” he explained.
Many brokerages assume becoming the primary carrier for their customer is the way to scale sales, while Surge uses these integrations to provide the necessary freight overflow coverage that goes unattended in order to compete with the startup digital brokers in its space.
“We don’t compete as a primary [carrier] anymore because that’s what digital brokers are doing and they’re losing money,” Singh explained. “So we compete to be an overflow backup and still do very well on less volume.”
While the risk of investing so much into digital transformation may seem daunting, Surge has seen a payoff. Since going digital, it has seen 180% growth in revenue while still maintaining profitability.
Singh explained how proud he was of his team who was showing up to the digital arena to compete and successfully scaling their digital growth.
“It’s amazing we’re growing as much as we are,” he said. “We have to compete in a marketplace where my competitors don’t even have to be profitable. There’s no outside money for us; we don’t have a choice.”