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How can technology brokers in logistics grow their market share and compete with the largest 3PL in 2018? – Trent Charlton – LinkedIn

Hint: It’s all about getting owner operators and independent contractors to stay.

Strategic partners are the best way for a technology broker to get up and running in a new market. These symbiotic partnerships help the technology broker ramp their volume exponentially to keep their newly on-boarded carriers happy while the strategic account has the broker’s engineering team fine tune the technology to better fit the company’s specific needs. These relationships really need to be a match or very close for this to work and when its working it can reduce costs exponentially for both parties.

Once you identify a working go-to-market strategy with your strategic partner then you start over again, preferably in a market where the strategic partner is struggling. Once established in that market you can begin to invite local SBM accounts into the mix at a better margin while quietly reducing your less profitable business to increase overall margin and control costs. As you increase your SMB business as a percentage of market share you will also typically increase your margins.

Enterprise accounts that are in the technology space can be elusive and depending on the part of the country it can be difficult to bring them on even for testing. Example; companies in the Midwest more often prefer long-term relationships over new technology but companies in the West are usually more willing to try something in a pilot to see if it can help them reduce cost, increase efficiency or just offer more visibility for their customers’ to reduce inbound calls.

SMB (small to medium business) accounts don’t often get the larger discounts under contract with the asset providers so they are more likely to test these new technology companies as they enter the market. Technology brokers will typically focus on owner operators and independent contractors with less than 20 trucks and more often with less than 10 trucks in their fleet while the nations largest 3PLs focus on relationships that are often 50 trucks or greater to single source. This profile carrier can be very time consuming to on-board but can give shippers and their customers’ access to capacity they might not have ever had access to in the past. Many shippers will work with the assets, the 3PLs and the technology brokers simultaneously when obtaining a spot quote.

Lastly, I would like to touch on contracts. If you are an asset in the full truckload / LTL or 3PL space and still negotiating a 1-2-year contract you are going to continue to lose market share. These technology brokers that compete in the ‘Uber’ space (they all hate that reference) will steal your spot quote business and can operate with weekly contracts to secure shippers’ seasonal moves. These smaller technology brokers are nimble and will steal this higher margin business right out from under your nose and many companies rarely ever notice it was missing? The moral of the story is that shippers are looking for faster competitive quotes and shorter term contracts.

Questions as we head into 2018:

  • On larger deals can an owner operators with 10-trucks in a multi-sourced environment compete with a single sourced asset with hundreds of company trucks?
  • Can companies like CH RobinsonJB Hunt and Old Dominion continue to grow their margins as Uber Freight and Amazon enter the market?
  • Will smart trailers or smart sensors offer real time capacity, and will the LTL providers start to feel pressure from the technology brokers as they enter into LTL, or will this take off once 5G/IOT is mainstream in 2019 the following year?
  • Will any technology brokers in the US support volume full truckload and LTL at the same time? Companies like Convargo in France are doing it, but we have not seen US companies try and roll-out a national solution, yet!

Below is a list of a few technology companies operating in this space and what makes them different from a driver pay standpoint. Technology brokers will be quick to tell shippers what makes them different and the problem they solve but I would argue that it won’t matter if you can’t on-board and retain your carriers and give them a reason to come back and work with you again. Moving forward drivers need to be the focus and helping them get paid quicker is a great way to organically grow your driver pool and increase capacity.

  • Cargomatic: No payment incentive. If the driver’s score is high with shippers, you could have quicker access to spot moves.
  • Convoy: Pay within 24-hours if you use the Convoy App. If not, the driver could wait up to 30-days. The goal is to get the driver to use the app.
  • Uber Freight: Fee free payments within 7-days.
  • Transfix: Will offer 2-day payment to drivers for 2%. Currently being used by 20% of drivers.
  • Amazon: ‘Relay’ is an app that is designed for truck drivers that makes it easier to pick up at Amazon warehouses. The app will give Amazon direct access to hundreds of thousands of trucks across the country. Amazon is working on their own freight matching app.
  • CH Robinson: An option to get money quicker once your quickpay contract is approved, currently 2%. Some cash advance options but unclear on how they work.

In closing, this is going to be an interesting year watching the 3PLs and the assets hold onto market share while they are actively being pursued by the technology brokers that now include Uber Freight and Amazon.

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