The Digital Freight Threat: It Isn’t What You Think

DIGITIZING AND AUTOMATING the entire freight process isn’t much of a problem for the lucky 5% of the industry with all the right resources and skills. But, for the other 95%, it’s going to be impossible unless they get some serious help. And, unless everyone participates in the new "digital freight future," then it’s all going to be a pointless exercise for the 5% that that can. Let me explain.
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If you are a Top 20 Broker or 3PL doing business with a Top 20 Shipper and hiring Top20 Carriers, then digital freight and achieving high levels of automation is easy. In this scenario, everyone is moving in the same direction and has access to powerful automation tools. They can share technology and help each other when they hit a technical speed bump. They have dedicated tech teams full of experts working on projects together, and they have all the needed resources to make things happen. The problem is that this scenario likely accounts for just 1%, and likely much less, of all loads moved every day.

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The other 99% of loads being moved involves at least one of the above parties (the shipper, the broker, or the carrier) being small. That size mismatch between trading partners creates enormous issues, and it essentially dashes any hopes of end-to-end automation. This means that many of the automation projects you undertake internally are potentially wasted, or at the very least, they don’t rise to their full potential.

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AS WE ALL KNOW, IN THE WORLD OF LOGISTICS, THE CHANCES OF EVERY PARTY IN ITS MOVEMENT BEING APPROPRIATELY EQUIPPED TO ALLOW DIGITAL REIGHT PROCESSES ACROSS PARTIES ARE CLOSE TO ZERO.

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The weak point, of course, is the tiny carrier and their inability to play ball. For example, if a Top 20 Shipper hires a Top 20 Broker, the carrier is like most carriers, having less than five trucks and just one office person (often a family member of one of the drivers). The chance of actual digital freight processes or automation is close to zero.

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The same applies if a Top 20 Shipper gives a load to a small broker, who then provides the load to a massive carrier. The weak point? The small broker. And it’s important to remember that over 95% of all active brokers are considered small, with less than $10Min annual revenue and less than 10 team members working there.

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The same issue occurs when the shipper is the "tiny" party paired with a huge broker who contracts with a huge carrier. Again, the weak point is the small shipper, as most are, so all digital freight hopes break down once again.

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My point is that the promise of digital freight efficiencies and high levels of automation are dashed unless all parties are similarly equipped—and capable. As we all know, in the world of logistics, the chances of every party in its movement being appropriately equipped to allow digital freight processes across parties are close to zero.

This does happen more often in the Less-Than-Truckload (LTL) world, where the benefit of limited carriers and published tariffs helped usher in automated quote, book, track, and bill processes. This allowed commercial software to easily connect the related parties to digitize most, if not all, of the entire process. However, LTL freight movements are small compared to the rest of the industry, accounting for only around 10% of all freight movements. In the rest of the industry, truckload movements are king —and so it’s where all the problems lie when trying to achieve any semblance of digital freight capability. 

I think we can all agree that in truckload freight, intermodal, or drayage, digital capabilities are a complete mess. It’s a Wild West patchwork of people and technology, all trying to move in the best direction but with one ongoing problem—the small, non-technical, industry player. They are still highly inefficient and manual, and things have not changed fast enough over the past 10 years to make even a dent in the problem. They are the weakest link in the chain. 

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So, how do we solve this seemingly messy problem? 

The answer? Self-interest. 

Suppose you are reading this, and you’re one of the sophisticated crowd. In that case, you owe it to your less-sophisticated vendors and customers to steer them in the right direction regarding well-proven and widely used digital freight technology that will show them the benefits of implementing such technology. This doesn’t mean you need to become their IT vendor, but it does mean you should encourage them to participate, experiment, and try a few modern software products you recommend to them that will genuinely help them evolve. When they do—you will benefit. 

That doesn’t mean you should force them to use narrow software or technology products that might only connect them to a single broker, carrier or shipper. That’s counterproductive. You should recommend software products to help them transform their business, become better organized, and connect them digitally to this new world.

For example, a software solution connected to just one single load board is close to useless to anyone. You wouldn’t use it, either. But I think you’ll agree that a solution that is natively connected to over 50 load boards is much more helpful to the user than a solution connected to just one. Similarly, a solution that works with just one factoring company or payments provider is less practical than a solution natively connected to 20 or 30 or more. 

Well-written freight software solutions with no conflict of interest for the user and accessible to anyone are succeeding—and they are increasingly connecting the minor industry player to the world of digital freight movements. Moreover, suppose these small players become fully integrated into all the big-name industry services that everyone uses daily. In that case, they’ll lift the entire industry toward end-to-end freight digitization. 

Better still, you will benefit as well, if your customer or vendor also helps, as they’ll have access to proven freight technology that gets them more organized. So, point them in the direction of non-conflict, open networks and software that interconnects them and you. Everyone wins.

Our job as sophisticated individuals (and efficiency-seeking companies) are to help the incoming tide lift all boats. When we do, and when everyone can connect digitally with you, your costs will go down, your profits will go up, and your customers and vendors will love you for it. 

So, let’s all help a small carrier, shipper, or broker understand how they can participate in this new world of digital freight—and you’ll see your own business grow as a result. 

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As the title above eludes, the real threat of digital freight occurs when we don’t ALL participate in the process.