Some of the wealthiest tech pioneers are pouring money into trucking logistics, sold on the idea that the industry is ripe for a new manner of technological disruption.
When Jeff Bezos, Bill Gates and eBay founder Pierre Omidyar throw their support behind startups, the Silicon Valley and Wall Street hype machines go into overdrive. App-based services that match shippers and truckers through an online marketplace, also known as digital freight matching, or DFM, has become the new, new thing, to borrow a phrase from author Michael Lewis.
Don’t get me wrong. I love the fact that technology is at the forefront of the conversation in and around the nation’s freight system. Shippers, carriers, and logistics service providers must embrace automation and other technologies to reduce costs, increase productivity and improve compliance in order to achieve operative and competitive advantages.
But some perspective and context are always necessary when evaluating potentially disruptive technologies. While headlines trumpet startups that promise to fix one of freight shipping’s biggest inefficiencies, it’s too early to declare victory. Shippers must look at how can DFM help with strategic transportation challenges, not just individual shipments. In that spirit, I offer five issues for shippers to think about when considering a digital freight matching provider.
Matching truck drivers with loads without human intervention sounds cool. What does that mean for customer service or when something goes wrong? There are many intricacies involved in moving freight, and any seasoned logistics professional knows that any number of things can, and often do, go wrong out on the open road. When the inevitable occurs, human beings, not an app, are your greatest asset. Automation is here to stay, but not everyone is going to want to interact with a machine. They want to build trust and loyalty. Technology must be combined with experienced human support for the greatest efficiency and cost savings in a transportation network. I salute the technical achievements of DFM providers whom have automated large portions of the operations, but I would encourage shippers to ensure that the technology is backed up by dedicated professionals.
Can the DFM provider handle the complexity of your needs? Logistics is more than getting from point A to point B, yet many of the leading DFM apps are focused only on individual, point-to-point shipments. And yet, the reality for many shippers today is that their supply chains are becoming ever more complex, and as such they require the support and expertise of a 3PL that can execute strategic solutions in order to lower costs and create efficiencies. Shippers should seek out 3PLs that can automate the creation of sophisticated multi-leg, multi-modal routes. This approach optimizes costs for shippers while further strengthening carrier relationships.
How does the DFM provider ensure that the best possible carrier is hauling your load? As any shipper, knows, not all carriers are created equal. There is a wide variability in the quality of carriers, which is not entirely reflected in their on-time delivery (OTD) performance. For example, is the driver familiar with the facility- or is this his or her first visit? Is the driver prepared to handle any complexities that may arise with regards to the commodity itself? 3PLs that run regular routes with a trusted network of carriers know that there are significant efficiency gains to be realized as a result of that regularity. When you work with a 3PL that provides strategic transportation services, you are assured that only the best carrier will be carrying your freight, and you will benefit from the efficiencies that come with repetitive shipments. At the end of the day, shippers should ask their DFM providers how they ensure that a given carrier is the best carrier to transport their shipments. There’s a trust factor in shipping that can’t be ignored.
How much data does the DFM provider have? Data lies at the heart of DFM. Since some of the DFM providers are startups, it’s not clear what kind of data they have available. New companies that are entering the market will have a harder time effectively and efficiently matching freight with carriers without ample data to back the real-time decision-making. Predictive analytic tools are only as good as the historical data you have to feed the model. Without a long track record of performance, it’s hard to trust on-time delivery rates and other measures of quality.
Does the DFM offer multimodal solutions? The world is getting flatter. Your supply chain is global and so are your customers. You need full visibility into that entire chain of movements, from ocean or air carrier to rail to truck to final mile. As you grow, your shipping needs become more complex. While a DFM app that connects shippers with truckload carriers has its place, shippers would benefit more from forging long-term relationships with 3PLs that offer multimodal solutions and technology that provides visibility to their shipments in transit, whether the 3PL brokered the freight or not.
Greg Carter is the chief technology officer of GlobalTranz, a technology company providing cloud-based transportation management system products and services.