Q3: The Perfect Storm of Pride and Pressure

2020 has been a mixed bag of emotions, challenges, opportunities, and everything in between. Nobody was immune to what this year has thrown at us, personally and professionally; we all experienced the ups and downs. Looking back on Q3 for MoLo, the best way I can describe it is a perfect storm of pride and pressure. We achieved the most significant growth in company history during the most challenging freight market we’ve ever seen.

In July, rates crept up throughout the country. In August, we reached a breaking point. Spot rates exceeded contractual rates, and every shipper we work with was talking about givebacks and rejections on both spot and contractual business. By September, rates had peaked, and it was pure chaos throughout the market. Tender rejections nationally hovered around a staggering 25%. $3/mile was the minimum to not get hung up on by a carrier looking for a load.

At the onset of the market shift, our leadership team sat down to discuss our strategy. We reminded ourselves of the three core problems we were trying to solve when starting MoLo:

1.      Due to the cutthroat nature of this business, brokers carry with them a reputation of not treating their employees well.

2.      Drivers and carriers are taken advantage of and disrespected. There is little-to-no trust and are often treated as a “necessary evil” rather than a customer.

3.      Brokers rarely live up to their commitments to shippers. Promises are broken when it’s in the broker’s best short-term interest to break them.

That third problem focused on shipper commitments was at stake in Q3. We knew many of our industry peers would leverage the market shift to re-price their contractual volumes. Not only is this reinforcing the belief that brokers can’t be held accountable, but more importantly, they can’t be trusted.

How is MoLo different? I get this question a lot. Largely, all brokers are doing something very similar to move loads. We all use data and tech to empower our people. The level to which we support and execute for our customers, however, varies quite drastically. With that, the market chaos in Q3 created a true differentiation opportunity for us.

MoLo seized this opportunity to be different. We chose to maintain our contractual rates and continue to execute at high service levels. While we didn’t know what the outcome would be, we wanted to do right by our customers.

That is what building a service-centric business is all about, in my opinion. Believing in something, committing to it, and executing it. Taking a leap of faith that the service we provide will yield long term profitable and sustainable results.

So, we took that leap of faith.

We started with a company-wide Zoom meeting where we outlined exactly what we were going to do and why. Buy-in from our people was so important to make this work. We were going to endure several very challenging months, but it could only work if we did it as a team. We reminded everyone what our peers were doing, and why shippers hated it. We reinforced our values and what we stood for.

Then we called our largest contractual shipping partners. We walked through the financial impact of our decision with them. We knew they were hurting from all the contractual givebacks and we didn’t want to add to that pain. Our shipping partners valued this and looked for ways to help us. They awarded us additional contractual business at current market rates. They sent us extra spot business when our rates were competitive. Some even went so far as to write letters of recommendation speaking to how we’d performed for them. The letters gave us a tremendous sense of pride. Below is a snippet from one of those letters:

MoLo is consistently in the top quartile of our strategic carrier network for On Time Delivery (OTD) and adhering to contract commitments. In addition, the MoLo team always thrives under pressure – in August, MoLo is our top performing carrier for OTD.

-Fortune 250 Food & Beverage Shipper

In an industry where integrity is always at question, we wanted to be extremely blunt and honest about our strategy. We vocalized our story and message across social media, leveraging the changing landscape caused by the pandemic. We knew there were shippers out there hurting who could benefit from a partnership with us. We tried to make the most of every opportunity to speak to what we were doing in the current market as we were doing it.

The results were incredible. For the first time, new shippers were calling us looking to partner. We’ve spent 3.5 years working tirelessly to build a reputation as a phenomenal service provider that executes on its commitments. Q3 created the perfect opportunity to not only talk the talk but also walk the walk. And that’s exactly what we did.

We brought on more shipping partners in Q3 than in any other quarter in our history. The volume growth that followed was staggering.

Over 40,000 shipments. $78 million of revenue. Short-term margin numbers in the single digits that, well, weren’t exactly pretty. When segmenting out our contractual business, our margins on everything else were very healthy, which spells long term success as new bid cycles turn over this winter. Long-standing shipper relationships that strengthened and positioned us for profitable growth in 2021. New shipper relationships where we proved our capabilities in very challenging market conditions and will position ourselves for profitable growth into the future.

Looking into 2021 and beyond, differentiation will continue to be top of mind. Many would say current bid processes are stale and archaic. I understand that sentiment; it’s our job to listen to (and challenge) our customers while providing them with solutions that make sense. In some cases, that means agreeing to and executing long term contractual bids. We’re also leveraging new, dynamic, automated, spot pricing solutions to meet our customers’ needs. Regardless of how the freight is priced, we’ll continue to make service and execution our highest priority. We’ll continue to focus on technological advancements to create automation opportunities, better transparency, and improved communication. We’ll continue to build out a drop trailer strategy that gives us greater access and density with our shipping partners, as well as savings on accessorial costs and efficiency gains for them.

In Q3, our path was not the easy one. In fact, I think it was the hardest, most stressful one we could’ve taken. But as I look at where our business is today, I can’t help but feel so incredibly proud of our team. We dug in and went to work when others wouldn’t. We didn’t sacrifice our values for short term profit gains. We continued to work as a team and support one another despite the adverse conditions. We all came out of Q3 stronger together. MoLo has never backed down from a challenge and we never will. Q3 gave us the greatest challenge we’ve ever endured, and our team absolutely dominated it.

For those that don’t know, MoLo is short for Modern Logistics.

To us, this is what a Modern Logistics company looks like.