The digitization of the supply chain industry has been all the buzz in recent years. From lumpers on the freight docks in Erie, Pennsylvania to the Patagonia-clad investors of Silicon Valley, everyone seems to be talking about technology “disrupting” logistics.
The areas of disruption and digital freight matching have been well-covered by folks across the industry—such as Truckstop.com’s CEO, Paris Cole, in an article for Heavy Duty Trucking and more recently by FreightWaves’ own John Paul Hampstead.
So instead of rehashing which companies are getting funding or who is claiming to have the next transformational technology, it may be more beneficial to explore the market conditions that must be present to allow for meaningful change and what value that may bring to industry participants.
“The Bazaar Economy”
In this 1978 article, Clifford Geertz went to various developing countries to observe their marketplaces and identify what makes them run efficiently or inefficiently. He identified a few key factors that inhibited markets from being most effective:
- Information can be poor, scarce, maldistributed, inefficiently communicated, and intensely valued.
- The search for information that one lacks and the protection of information that one has is the name of the game.
- Buyer-seller relationships were often antagonistic and strained.
- Both sides spent excess time and resources negotiating prices with existing trade partners.
- Both sides struggled to find new trading partners due to the lack of available information.
Does this sound familiar? It’s been more than 40 years since that article was published, and we have countless more tools at our disposal, yet many of those same challenges apply to the logistics industry today.
Overcoming the Obstacles of “The Bazaar”
What can we all do to help mitigate these negative aspects of our shared-freight ecosystem? How can we create value across the industry and improve everyone’s ability to run their business more effectively?
- Increase transparency and trust of information
- Decrease time and resources needed to make connections
- Provide value beyond the initial connection
- Foster and support a more collaborative ecosystem
Increase Transparency and Trust of Information
A source of accurate, unbiased, and comprehensive information is going to prove vital to overcoming the barrier to building trust between both sides of a freight transaction while mitigating the risk of potential bad actors in the process. In an ideal world, parties could utilize a uniform source of truth that fit seamlessly within each of their individual workflows. This would help remove some of the friction of finding new partnerships and open the doors to new, mutually beneficial business relationships.
Decrease Time and Resources Needed to Make Connections
As friction is reduced, so too is the effort required to make connections between parties. The ability to quickly find, assess, verify, and successfully onboard a new partnership digitally and automatically should be table stakes for any proposed digital freight market. If you merely slap a site or app in front of a completely manual process, then what have you really accomplished?
Provide Value Beyond the Initial Connection
“Digital Freight Matching” has become a popular term, but it’s only a tiny portion of the overall life-cycle of a freight shipment. Industry participants can utilize six or more applications/programs, costing them up to five additional hours of time to complete the movement of a single load. To provide real value-add, an application needs to be much more than just matching. These game-changing platforms will need to provide benefits before a tender is even awarded and continuously add value seamlessly throughout the duration of the load—all the way through until both parties are fully documented and compensated for their work.
Foster and Support a More Collaborative Ecosystem
Success in this highly-fragmented industry will not be the result of a single company or platform. All parties involved can achieve greater efficiency and results by leveraging their own unique specializations while also working with partners who complement those skillsets with a unique value of their own. It takes a village of individual contributors to create a truly successful marketplace.
To learn more about what Truckstop.com is doing to overcome these obstacles and help the supply chain industry create a more efficient marketplace, please visit Truckstop.com.
Original Source: https://www.freightwaves.com/news/improving-digital-freight-markets-lessons-from-history