12 min read
Jan 25, 2018

Digital freight matching will revolutionize the trucking industry—eventually. Here's why

Just a fad, or here to stay? Here we discuss why digital freight matching is the new disruptor that has the potential to revolutionize the trucking industry—eventually.

Rhiân DaviesContent Analyst

Unilever, Uber, and DB Schenker are just a handful of companies who have joined the digital freight matching arena-an arena that has seen over $180 million in venture capital investments since 2011. With adoption rates of sophisticated transport management software by small and medium sized businesses growing, why are so many of the big players interested in this new model?

Gartner first noted the digital disruptor in the freight management industry in their Hype Cycle for Transportation, 2012 (content available to clients), and the market has since grown at a rapid rate.

The market is ripe for platforms that can replace many of the manual processes that brokers carry out in the name of freight matching. Can this new technology transform an industry that has relied on freight brokers since the early 1900s?

In this article I’ll discuss why digital freight matching will revolutionize the freight industry-eventually. I’ll take you through:

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What is digital freight matching?

Digital freight matching replaces the middlemen involved in the supply-chain of load-matching, namely the third party logistics companies (3PLs) and brokers, with new technology that connects the two.

Often described as “Uber for freight” (Uber did indeed join the digital freight matching market in 2017), digital freight matching are apps and digital platforms that seek to match a vehicle’s load capacity with nearby companies who are looking to ship goods.

Through these apps, drivers receive alerts or can browse an app-which details the kind of load, distance, timing, and price-and can choose the offer that suits them most in a few clicks.

According to Ozan Baran, CEO and founder of digital freight matching platform Quickload, digital freight matching comes both as a response to the lack of trust between shipping companies and brokers-despite the long history between them-and a need for the modernization of traditional load boards.

He says, "The need for efficiency, the lack of transparency, and common hidden fees is what is behind the proliferation of on-demand trucking services. I've worked in logistics for twenty years and have really started to notice recently that shipping companies aren't happy with traditional brokers due to the lack of transparency and hidden fees, and are now really open to the idea of new ways to ship their freight."

Uber Freight's digital freight matching platform Source: Uber Freight

As well as improving notoriously slow turnaround times, digital freight matching also comes as a response to other pain points in the industry.

Advantages of digital freight matching

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The empty mile problem

Consider the statistics below. Even for larger freight companies, a truck driving empty miles-without any cargo in its trailer-becomes a costly affair. Third-party brokers aim to close these gaps for a commission, but through a protracted manual process that can sometimes leave drivers frustrated-and empty, still.

Baran describes the traditional brokering process as ‘old-fashioned’, with inefficiencies and prices driving the industry to digitization.

He says, "The old-fashioned process that drivers have to go through to find good paying loads is what makes them run empty or half-empty miles around thirty percent of the time. With on-demand platforms trucks are likely to be on the road less because the shipments are booked more efficiently. And, when it's easier to connect trucks with companies that need their services, there is less likelihood of drivers returning home with empty trucks."

Digital freight matching’s on-demand nature responds to this inefficiency in the market and allows drivers more direct and timely control over their schedules. Some platforms also include functionality for advanced visibility into future loads, so drivers will know before their first job whether they’ll be able to fill the empty miles with a backhaul.

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Digital freight matching and Electronic Logging Devices

Late last year the Electronic Logging Devices (ELD) mandate was issued by the Federal Motor Carrier Safety Administration (FMCSA), which overhauled the obligations of electronic tracking in the industry.

Commercial vehicles must now be fitted with electronic devices which record:

  • Hours of service

  • Records of duty

  • Engine hours

  • Location information.

With stricter rules and monitoring of driving hours, this is likely to affect the freight matching industry in terms of the importance of the timeliness of loads.

Speaking to Josh Breger, Director of Sales for digital freight matching platform HaulHound, he believes that the renewed ELD mandate could mean that drivers come to rely more on digital platforms to ensure that the hours that they can take advantage of the hours they can legally drive.

He says, "Though the roads are safer with the ELD rules, this does mean that there is less driving time for drivers. A major facet of digital freight matching is to help the driver spend less time on menial tasks and stay focused on driving. If there are fewer hours in the day that they can legally drive, they should utilize a digital freight matching platform to more efficiently find and plan out their next loads."

Baran echoes this sentiment, adding that brokers may find it more difficult to secure carriers due to the ELD rules, and digital platforms provide a more responsive and time-sensitive approach to freight matching.

"Shipping companies or traditional brokers who have trouble securing capacity-and who are often looking for below-market rates, provide short lead times, or have lengthy loading times-might struggle to find reliable carriers when they are more conscious of the ELD rule. Digital freight matching platforms will likely benefit because they utilize smart technology to allow truckers to book their hauls, and we pay them quickly."

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Current broker-carrier relationships

It’s yet to be seen how much the emergence of digital freight matching platforms has affected the traditional broker-carrier relationship, if at all.

As with any type of new disruptive technology, demographics will affect the uptake and adoption of such technologies. Veteran and generational truck drivers have been slow to adopt this new technology when compared to other industries. This particular demographic may continue to favor the focus on the human, interactional, and relationship-based aspect of a traditional broker company, instead of a faceless app.

However, larger broker companies are entering the digital freight matching space by developing their own technology-driven platforms. Breger believes that smaller firms may be pushed out of the market due to a lack of available funding.

He says, "Another effect it might have is on the increasingly fragmented freight broker market. Up until this point, smaller brokerages have been able to exist amongst the five to ten larger well-known firms. However, without the deep pockets to build an in-house digital freight matching solution, many of these businesses may be forced out. Digital freight matching solutions, such as HaulHound, work for both the trucking companies and freight brokers and aims to promote grounds for competition with the big guys."

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Digital freight matching will transform the industry-but it still has a few hurdles to clear

Digital freight matching is a supply-chain technology that’s still in its infancy. While it currently effectively addresses some of the pain points drivers face in the freight matching industry, it will be a few more years until it can be considered a solution that can replace brokers as a whole.

Take, for example, the relationships that have been built up between drivers and brokers over many years. Some drivers may not welcome loads from unfamiliar and faceless brokers, if indeed the smaller brokerage firms are pushed out of the market by digital platforms.

Breger references the impact the ELD rules have had on the industry in terms of older drivers leaving the market, and believes that digital freight matching solutions could have the same effect.

He says, "Instead of transforming how they work, older drivers are simply retiring, leaving a huge gap."

However, Breger sees a silver lining here.

He says, "As younger generations become reliant on their smartphones to pay bills, do business and influence their lifestyle, digital freight matching tools could entice the younger generation to get behind the wheel."

Additionally, digital platforms should be wary of seeking to erase the necessary human component within freight matching due to the time-critical and specialized nature of the industry.

Baran says, "Human interaction within these apps is still needed. We still have actual people who keep track of every shipment in real-time. From checking with the shipper to see how much longer a driver will have to wait on the loading dock, to negotiating with receivers to guarantee load acceptance, we do everything to get the job done and give the best customer experience possible. It's a smart combination of traditional techniques coupled with cutting-edge technology."

One thing is for sure: the freight brokering industry is one that requires modernization, and digital freight matching is a scalable venture that will have a truly meaningful influence on the market. The model opens the future to more transparency, autonomy, and efficiency, which in turn brings opportunities for a more diverse and dynamic workforce.

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What next?

  • Take a look at our catalog of freight management software to help manage your broker accounts, schedule pick-ups, and manage tariffs

  • Leave a comment below and let us know what you think is in store for the future of digital freight matching.

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