Technology has been steadily revolutionizing the transportation industry from front to back, with everything from blockchain technology that optimizes the supply chain to artificial intelligence that manages warehouses.
Now, an emergence of a simple but effective platform is paving the way for the future of logistics…
Digital freight brokerages.
What is a Digital Freight Broker?
A digital freight broker is an online “matchmaker” that connects shippers (individual companies or shipping carriers) with truck drivers. It typically uses a mobile or online application with programmed algorithms to connect companies and truckers quickly and effectively. Think of it like online dating but for trucking.
Here’s how a digital freight brokerage process typically works:
- A shipper has a load they need to send out, but they don’t have a long-term contract with a trucking company to collect that load.
- The shipper goes on the app of the digital freight broker and inputs information about the delivery, such as the pick-up location, weight, number of pallets, destination, timeline, special accommodations, etc.
- The digital freight brokerage uses an algorithm to find nearby drivers who can accommodate those needs.
- It alerts the truck driver to the shipment, and the driver can then accept (or deny) the shipment based on their availability.
- Within minutes, there’s a match between the shipper and driver. They agree to the terms, and they’re good to go on the road.
- With some technologies, the digital broker may utilize machine learning to help optimize routes and improve the supply chain.
What Does a Digital Freight Broker do?
There are two major challenges that the digital freight broker platform is working to solve.
Digital freight brokers cater to smaller companies that need flexible shipping to compete
A lot of companies don’t have long-term contracts with trucking companies, because it doesn’t make economic sense. Although the truck driver shortage is lessening at this point, the heavy impacts still remain. Trucking company prices rose dramatically, and there were extreme delays in the supply chain (so extreme that many are still in effect today).
Those companies with smaller or infrequent shipping needs don’t have the need or budget for long-term contracts with truckers, especially with the impacts of the shortage, but this leaves them at risk of pricing fluctuations and shipping uncertainty. If no one’s available to pick up their load, it won’t get picked up or it will get shipped at a hefty fee.
Digital freight brokers make it easier for small to medium shippers to find less expensive, on-demand shipping for their purposes. They don’t need a contract—they just input the info and a trucker will come get their goods. This can save a lot of time, resources, and cost for companies that don’t currently need to do consistent business with a trucking company.
Truckers have more flexibility and can optimize their truckloads
One of the most significant concerns for truck drivers, especially independent or partially independent contractors, is return loading. They drive from LA to NYC with a full truckload of goods, but now they need to find goods to bring back on the drive from NYC to LA. This wastes a lot of resources—leaving trucks empty and unused—and reduces income for truckers.
A digital freight broker can help drivers keep their trucks full at all times. When the driver gets to NYC for example, he might be able to match with a load going to Chicago. In Chicago, he might match with three loads going to LA. This helps reduce the risk and costs of “empty miles” at any point along his journey home.
Also, drivers love the flexibility that this kind of platform offers. They can choose which routes they want to accept, and they get paid quickly. This helps improve the lifestyle and livelihood for truckers, which is especially important in the race to get more drivers in the industry to fight the shortage.
What are the Other Benefits of a Digital Freight Broker?
Previously, non-digital freight broker firms would do the same sort of thing, but they’d have to do it by phone or fax. Matching could take hours or days. Digital freight brokers, though, allow for a much faster connection—sometimes within minutes. There’s little risk of missing out on the best drivers near you with a digital process that is so fast.
Another time-saver is a reduction in the amount of paperwork. A lot of digital freight broker apps can do all the paperwork through the app, including using photos for proof of delivery and signed bills of lading. No faxing or extensive paperwork necessary.
The best digital brokers use artificial intelligence and machine learning to optimize routes and predict supply and demand. This keeps costs low for shippers and demand high for truckers. They get some of the work of a regular dispatcher through the digital freight broker app.
A lot of digital freight brokers have been lowering their prices to compete in the market. This means a (short-term) reduction in cost, which has been highly beneficial to smaller companies who can’t afford high spot market prices.
Plus, since everything is digital and run by technology, the cost of labor is a lot lower. This means digital brokers can keep their costs low, so the majority of the money is moving directly from shipper to trucker.
Since everything is through the app, shippers and truckers can log on 24/7 to post or pick up jobs. This 24/7 access is highly convenient in today’s fast-paced, never-stopping consumer world.
Overall, the automation of booking, matching, and administrations completely streamlines the transportation process. The technology does the work of what a human freight broker would—but the app typically can do it faster and at a lower cost.
Some common digital freight brokers:
What are the Disadvantages of Using a Digital Freight Broker?
Digital freight brokers are a great way to deliver freight on a one-time, low-cost basis. However, there are still some concerns with utilizing this model as the go-to for shipping.
- Most digital brokers can only offer dry vans or flatbeds, based on the availability of nearby drivers. They may not be able to meet your specialized needs, like a refrigerated or temperature-controlled van.
- Some may only offer full-load capacity, which defeats the point of trying to send out a smaller load.
- Shippers might be taking a risk on the truck driver that takes their goods. Service tends to be inconsistent.
Most importantly, it’s not a platform that allows you to establish a relationship with your carrier. It’s a “one and done.”
Although technology is a major advancement, it’s still single-use. Digital brokers find you a trucker, and that’s about it.
Check out Redwood’s ongoing projects to see what you could be missing out on.
The Better Solution
Why spend time and money on a platform that has just a single-use? You want a partner who uses technology… but can do it all. You want a transportation system that can let you do single shipments while also optimizing routes, managing inventory and warehousing, reporting and analyzing, and so much more.
That’s what we do at Redwood Logistics. You get the benefits of a digital freight brokerage… plus so much more. Our extensive list of services includes human-based consulting with advanced technology enrichment. It’s our job to not only match you with the right truck driver but to ensure that every part of your supply chain is customized for your specific needs.
We’re equally as on-demand as a digital freight broker, but with a lot more to offer our clients.
Contact us for a free consultation about how we would customize solutions for your shipping needs. We look forward to hearing from you.
Original Source: https://www.redwoodlogistics.com/what-does-a-digital-freight-broker-do/