Benn Bekic, Chief Strategy Officer for WiseTech Global, shares three practices that Customs experts consistently follow to boost their businesses.

One of the privileges of developing software for Customs brokers is that you get to have an honest, behind-the-scenes look at their businesses. After a while, you start to see trends, and you get a better sense of what works in this industry. And then you see what works much, much better. Here are some of the things I’ve observed my most successful broker partners doing.

1. Select a Niche

It may be a textbook, business school strategy, but it really works in our industry. Picking a niche for a significant portion of your business makes you different and allows you to develop more specific domain expertise that your competitors won’t have. A niche can be a specific industry like automotive or garment, a geography like a particular port or border crossing, a specific mode of transport like ocean or pipeline, being the broker (or broker division) for a particular freight forwarder or carrier, or a specific service level like high touch, high compliance, or lowest cost.

I can tell a few recent (admittedly US-centric) stories to illustrate the point.

At the June 2015 AAEI Conference, I spoke to one of the top recruiters in our industry. I asked her if there were any developing trends or hot areas that they were recruiting for. Her answer was instant and definitive: ITAR. She could not find enough candidates with ITAR experience. It seems that US weapons exports are on the rise, and the declarations associated with these exports are a rapidly growing niche.

I also recently spoke to a successful broker near retirement who said that if he were to do it all over again, he would do brokerage exclusively in the United States and exclusively for ocean imports where he saw the highest margins. He said that he would open up an office in four or five of the main US ports and just focus on giving the best service he could.

Finally, on a more cautionary note, size is also a niche. Everyone knows that you can get a certain type of service from a small boutique brokerage that is just not possible from the large brokers. However, people often forget their own version of the story where they thought it would be a good idea to bring on a large manufacturer. Remember how you found that the margins were terrible, that you didn’t make up the difference in volume because the manufacturer kept on asking for more and more service, and that in the end the risk associated with staffing up for the business was just too much? Remember how you wished you had not taken the “dream” client on? A broker generally has to be a certain size to properly mitigate the risks associated with the largest importers, unless of course the broker has done a fantastic job of both securing and vetting a good EDI feed. Also, the larger the broker, the more niches they can credibly play within.

2. Differentiate Service

Once a broker picks a niche (or niches in the case of larger brokers), it is time to differentiate their services to be more attractive to the niche they have chosen. This can include everything from tracking additional data elements important to the niche, to adding special checks and balances to additional services useful to the niche (but not purely brokerage like warehousing or local delivery).

The variations here are endless, and they’re usually seen by importers as table stakes that they are unwilling to pay extra for. Often, just to make it to the final round of the RFP, having a track and trace app, web reporting, document imaging, electronic billing, and a host of other modern services is a must, even if most importers will never use these features to any great extent. It is like the owner of one of the largest Customs brokers in Canada explained to me: “It’s future-proofing. The importer wants to know that their broker is healthy and able to continue to invest in their business. They want to know that if something is out there in the market, then their broker has it. It also gives us as the broker something new to talk about. We always need something new to discuss with prospects.”

So if importers will generally not use all the fancy apps and web portals brokers have to buy for table stakes, how does a broker truly differentiate their services? By focusing on their niche. Everyone will have track and trace, but not everyone will successfully be able to manage receiving return products for a Non Resident Importers (NRI) or capture actual received weight after shrinkage for Agribusinesses.

In this world of “Do more for me for less money,” a broker often hears things from their clients like “I’ve got good news! I’m going to give you 150,000 shipments this year… but I want you to do it at the same cost as you did the 100,000 last year.” In this world, you can go back to the importer and say, “That’s fine, but before I give you the discount, you are paying for the PO management and that eight-party, end-to-end visibility piece I developed just for you on the extra 50,000 shipments, and you’re getting me that EDI feed you have been promising.”

3. Automate, Automate, Configure

Once a broker has picked their niche and figured out how to differentiate their services so as to be attractive to that niche, then it’s time to support those decisions with technology.

This can include everything from Electronic Data Interfaces (EDI), to automated 3rd party email notifications based on milestones, and more. Defaulted fields based on the workflow you follow, automated checks on a client, custom reports and documents. The list goes on. Work release artificial intelligence can help focus your staff on shipments in danger of missing cutoffs and support your bottlenecks (which might be otherwise known as expensive senior staff). There are even systems that learn from patterns in your data entry to make suggestions the next time you are doing a similar entry.

The capability gap between a good software platform and a bad one is huge, and the difference between a broker that has automated and configured their workflows to the limits of their software and a broker who has not (or worse, one who thinks they have) is even larger.

If you are a broker that spent significant money on a good brokerage system, then one of the biggest ROIs you can get is to bring your service provider in once a year for a system health check. For a day of consulting you could find another 20% productivity just sitting there in your system. You pay for this productivity whether it’s utilized or not, and sometimes all you have to do is change a system setting or create a new template or workflow to find it.

If I could choose any insight for you to remember it would be this: The differences I have seen in how the best brokers and the worst brokers use the same software is a vast chasm that few ever cross. In a survey at the University of Nebraska, 90% of professors rated themselves above average. Similarly, 87% of MBA students polled at Stanford rated themselves as above the mean in their program. Even the best brokers I’ve ever seen still had a clear path to another 20% productivity. There’s always a way to work better.

Benn Bekic is Chief Strategy Officer for WiseTech Global


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