Celebrating 52 years in the freight management space, Paul L. Broussard shares his insight on the changes in transportation and logistics, and his forecast of the industry’s future with a uniquely Houston perspective.
Paul L. Broussard
Title: President of Paul L. Broussard & Associates, Broussard Logistics and Freight Cowboy―all based in Houston
Education: Graduated from the University of Houston’s College of Business in 1966, focused on the freight transportation program
Question: What are some of the biggest changes you’ve seen in the transportation and logistics industry during your career?
Answer: It’s really the use of technology to support the services we offer. In 1999, when my son Mike joined us, we had one computer, but we didn’t use it much. Now, we’re embracing technology to move from just freight auditing and the outsourcing of freight billing to capitalizing on the information generated by computers, apps and the efficiencies discovered when processes are automated―all in an effort to influence commercial carrier pricing.
Also, now, we're looking at the impact of Amazon. It’ll affect everybody, and transportation logistics is not exempt. Amazon has purchased its own fleet of airplanes to better serve and control customer shipments and, as a bi-product, to compete with UPS and FedEx, while Amazon is one of the biggest customers of UPS and FedEx. Amazon is redefining the transportation and logistics business.
Another change is Uber’s investments in driver-less trucks and how that will redefine how freight brokers, freight forwarders and third-party logistics (3PL) companies work. All of a sudden, the standard infrastructure of the industry is changing because, instead of a shipper going to a freight broker, the shipper could go to one of these companies that focus on driver-less transportation. There’s still a lot of safety concerns with the driver-less cars and 18-wheelers, but I think it’s coming. I look at the impact that Uber and Lyft have had on traditional taxi cabs and I wonder if it’ll have the same effect on the freight carriers as well.
Question: How do these scenarios affect traditional employment in the transportation and freight management industry?
Answer: With Uber, you're hiring 1099 independent contractors… and you're not paying payroll taxes and overhead in the same way as we traditionally have. It shifts the employee-employer relationship, therefore, driving costs down. The freight brokerage industry is going to be really challenged. It could possibly have a dramatic effect on the freight brokerage business and there's not going to be an issue about driver shortages.
Question: Let’s talk about the current driver shortage and what’s driving that.
Answer: There are a couple of things. Truck drivers are required to keep a log book to manage and keep track of their hours driving. It’s a transportation safety issue. Now, the government require electronic logging devices (ELDs) as a way to keep up with the drivers, keep track of what they're doing and where they are in their hours without the driver manually writing stuff down. The ELD is certainly more accurate and reliable than manually tracking time. What that has done is driven a lot of drivers out of the industry when transportation capacity is already tight. There's a lot of drivers that said, if electronic records had to be maintained, they might not make as much money. So, the ELDs are having an impact on driver capacity and availability.
Then a second thing is Uber entering the freight business. Uber investing in driverless trucks is basically disruptive technology. I mean, this can have serious financial impacts to regular business. Human-less trucks remove the limits of humans being able to drive and cuts down the costs since fewer people are needed to drive those trucks. If you don't have to have drivers out there, you don't have a capacity shortage after all. That's a big deal in our industry.
Question: What’s something that has surprised you about working in Houston?
Answer: Just how cyclical and connected it is. For example, when starting our business in 1978, we rented office space at Union Station Building downtown because it was relatively inexpensive, which was important when starting out with minimal capital.
After my son graduated from Texas A&M, he took a job with Eagle Global Logistics, which at the time was owned by Jim Crane, who is the current owner of the 2017 World Baseball Champions, Houston Astros.
Now, when we moved offices from Union Station in 1998, it was because the Houston Sports Authority had purchased that railroad property to transform it into what we now know as Minute Maid Park, the ballpark for the Astros.
Question: What are your proudest accomplishments for your business?
Answer: First of all, I’m proud that we’ve been able to stay in business that long, especially after Hurricane Ike in 2008 closed our office for two weeks. We had to find temporary places to work to keep operations going. That was tough, but we made it.
Also, I feel that building a family-owned company puts the business in a position to pass down to the second generation of family business owners. That makes me feel really good and the fact that we started with nothing.
We’re really proud of the railroad contract that we were able to put together with the executive management of all railroads serving the Houston area in 1978. Without that railroad contract, we wouldn't have been able to start the company or repay the initial $18,000 start-up loan. That railroad contract was our first transportation consulting revenue generator.
Question: You said your first loan was for $18,000. Do you remember how long it took you to pay it back?
Answer: Less than a year. The banker told us that he’d provide us with a non-collateralized $18,000 loan and we didn’t have to pay it back for one year, but we paid it off in about 10 months. Yeah, 100 percent of the $18,000. Not much nowadays, but it was a lot of money in 1978.
Question: So, what’s ahead for the freight transportation industry?
Answer: A lot of issues that are traditionally faced by freight transportation brokers will not be in place in the future because the brokers will do business differently. My kids are going to have to face all these challenges that we're talking about. We need to keep up with
with the shippers and the shippers’ needs and continue evolving the industry’s technology. And keep in mind the shipper’s perspective and how we bring value to a customer or prospective customer that’s changing too.