As shippers continue to face challenges like the truck driver shortage, capacity crunches, and rising freight costs, digital freight matching helps to fill the gap between the nation’s independent carriers and the companies that rely on them.
Many people don’t realize it, but the majority of U.S. trucking companies are not large organizations like Knight-Swift, J.B. Hunt, and Schneider. In fact, about 97% of carriers in the U.S. operate 20 or fewer trucks (while 90% of those operate with six or fewer trucks).
The national economy depends on trucks to deliver nearly 70% of all freight transported in the U.S. annually, according to TruckingInfo.net, accounting for $671 billion worth of manufactured and retail goods transported in the country by truck alone.
To help match those carriers (both small and large) with shippers that want to get their goods from point A to point B as efficientlyas possible, a new crop of “digital freight matching” platforms have emerged over the last few years. With names like Convoy, Uber Freight, and uShip, these companies comprise a segment of the transportation market that’s expected to take off over the next few years.
Frost & Sullivan, which refers to this market segment as “trucking-as-a-service” or TaaS, research firm Frost & Sullivan says the market to grow to $79.4 billion by 2025 (up from a current $11.2 billion). Digital freight brokerage claims the most significant share of the market, according to Frost & Sullivan.
“New entrants are trying to gain market share by offering price transparency, online load boards, and freight marketplaces for booking freight all via mobile applications,” a Frost & Sullivan analyst pointed out in the firm’s TaaS market report, “with the goal of disintermediating human interaction in the freight booking and payment process.”
How Does it Work?
Digital Freight Matching companies match shipper demand for carrier/trucking capacity using mobile- or web-based technology platforms—most commonly through the use of apps. Those apps provide welcome relief in a world that once relied heavily on “load boards” to make the carrier-shipper matches (and namely in the spot freight market, versus contract).
“The process of getting a package from factory to distributor to customer can be fiendishly complicated, involving up to a dozen companies and a bewildering mixture of paper and digital documents,” CNBC’s Joel Dreyfuss writes in The next Uber will come from the $1.2 trillion global truck and shipping industry. “Inefficiency attracts technology, so entrepreneurs and investors have leaped into the market with technology-driven solutions.”
Digital Freight Matching lets shippers directly and almost immediately find drivers with the capacity to transport their truckload (TL), partial truckload, and less-than-truckload (LTL) freight on the right types of trucks on the dates and routes that they need, MH&L reports. “Shippers get competitive and transparent rates upfront and can track in-transit and delivery details, so they always know the status of their shipments.”
Going a step further, some digital freight brokers have started using their truck equipment pools to speed up the movement of cargo and help boost productivity across the transportation chain.
For example, WSJ’s Jennifer Smith recently reported that Convoy and Uber Freight both recently launched fleets of trailers that shippers can pre-load with goods to speed up cargo transfers for drivers and shippers on their networks.
“J.B. Hunt Transport Services Inc. is testing a similar ‘drop-and-hook’ service,” she writes, “in which truckers can simply hitch their vehicles to already-filled trailers, through its digital brokerage platform, and plans to roll it out nationally this summer.”
With these new services, truck drivers can pick up trailers that have been pre-loaded with beverages, consumer products, and other goods, and then drop those loads at their destinations (versus waiting around for workers to unload and load cargo). “The process can shave hours off the time it typically takes drivers to start and complete freight deliveries,” Smith writes.
Additionally, to achieve the speed and visibility required to match the drivers to their loads at the facility level, companies are investing in digital yard management solutions that can expedite the loading process and can provide precise trailer location and load status information to all parties involved in real-time.
There’s More to Come
Expect the momentum around digital freight matching to continue as more shippers and carriers integrate digital technology into their supply chains—moves that will help warehouses, distribution centers, yards, and the entire transportation network become even more efficient and productive. Also, more importantly, customers happier.