IMC Consolidations: The Path Forward with Digitization
As intermodal grapples with a volume downturn that’s not expected to clear up until at least the fourth quarter of 2020, IMCs must decide what their future is going to look like. With the pandemic altering the way in which every business operates, there’s bound to be longstanding process and structural change that will become permanent.
One thing that this entire situation is definitely showing is the move towards digitization will only become more apparent and necessary to succeed in volatile freight climates. Having access to capacity, documents and real-time data all in one place is critical to keep supply chains intact. Here at DrayNow, we see this and continue to make sure that brokers have access to the best features the industry can offer.
The question for IMCs moving forward is: how are you going to adapt to the rapid digitization of intermodal? With greater technology solutions on the market, what is the plan, if any, to integrate that with the current business?
There are three paths moving forward that IMCs will most likely follow.
Business as Usual
One is keeping business as usual, but it’s hard to see what good that would do in a post-pandemic freight market. This entire situation has upended supply chains, bringing astronomical demand to some products while crippling other industries. Shippers are going to demand real-time visibility on every load to know exactly when that freight will be at its final stop.
The next path would be injecting technology solutions into the current business model. For larger freight brokers that still have a healthy amount of volume, adding tech will be necessary to continue serving customers and their needs. If the IMC has the durability to even expand their customer base, technology is there to let them handle the large volume of freight rolling in as demand picks back up.
And applying technology solutions doesn’t require a major change in operations. Either through the DrayNow platform directly or through electronic data interchange (EDI), IMCs can use products like DrayNow to find capacity and manage their freight while staying within the in-house TMS.
Technology and Consolidation
The final path we are going to see is a technology adaptation, along with a consolidation of IMCs. Consolidations are not new in the intermodal world and serve to combine the core competencies of each company in a united front. As companies adapt to new technologies, they need to adapt to consolidations as well.
For smaller and midsize IMCs, the most likely scenario is that IMC consolidations will be coming, and soon for that matter. The forecast of lower volume in the near future and general industry stability cannot sustain a large group of IMCs competing over business in a contracted freight market. By consolidating with one or two other businesses, market share increases and so does buying power.
Moving forward with that mindset of consolidation, the automation and efficiencies in freight technology will also cause companies to look at their current operations, divest in whatever they may need to, and come together to conquer the new frontier.
The way in which freight brokers are doing business may change forever. Change isn’t always a bad thing, especially when it brings a need for efficiency that only technology can supply. We may be looking at a smaller pool of IMCs down the line, but we’ll also be looking at stronger IMCs that did what it took to weather a crisis and adapt new solutions.
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