Business Owners Are Abandoning Logistics Agent Programs

The U.S. Logistics Sector 

Armstrong & Associates, a third-party logistics (3PL) consultancy firm, projected that the U.S. Logistics sector was the fastest-growing part of the Transportation industry and was forecasted to total over $150B in 2013, accelerating at a rate twice that of the nation’s GDP growth.

The extraordinary size and growth of the industry attract a wide range of professionals and entrepreneurs, some of whom have become extremely wealthy by carving out their niche in the industry.

As the industry has grown, many companies have begun offering hyped-up promises of ways to get rich through independent Agent programs that resell transportation services of the company.

As these programs have grown, it has become apparent that they rarely benefit the individual Agents but instead generally just the company offering the program.

The Agents that sign onto these programs are often stuck with situations where they receive a small portion of the profits but do the majority of the work to bring on and service new customers, all the while receiving a small portion of the profit.

In a recent whitepaper written on the subject, CarrierDirect provides an overview of how many of these Agent programs operate and the various scenarios that have left them chasing a dream without the ability to build a business that creates any long-term wealth opportunity.

“It’s an interesting practice that has come up over the past few years,” says Joel Clum, Vice President at CarrierDirect. “There are hundreds of Agents we hear from that explain how they got to where they are today and how they’re not really capable of growing their Agent program past a certain level, usually $1M in revenue. The companies offering the programs may do very well, but their individual Agents are left struggling to build businesses that ultimately end up being just another job that they have to push through.”

As they elaborate on the situation in their whitepaper, CarrierDirect provides additional options to consider for these Agents or professionals interested in the Logistics industry, one of which comes from going out and getting their own brokerage authority. Another option – without the raised bond requirement in 2013 – for entrepreneurs and professionals to consider comes in the form of Franchising, which has exploded in the Logistics industry over the past decade.

As Logistics has grown, “a number of the most exciting brands have used the Franchising model as the backbone of their growth such as Worldwide Express, Unishippers, and BlueGrace Logistics,” Clum added. “The programs are structured in a cleaner format, with more of the profits being channeled to the Franchisee who has more control over their business.

The businesses they build have a greater income potential for the Franchisee than an Agent would, with the ability to sell their business if they chose to after the business has grown.”