Some truckers have described the $54 billion digital freight market as the new Uber, but it has entered the trucking market. You may have believed that self-driving trucks were the biggest craze. A digital freight brokerage has turned into the latest buzzword around the industry as people have begun to use it for shipping and hauling freight. For those working outside the industry, the word has next to no meaning, but the word conjures up images of smiling truckers as they can ship freight easier than ever before.
Who Leads This Industry
Believe it or not, Uber has entered this market as “Uber Freight.” However, they’re not the only competitor in this business, and Transfix, a company valued at $800 million, has taken a big share of the pie. Experts list them as the fastest growing startup in this industry for the digital freight brokerage companies. While no one wants the comparison with Uber, many have viewed it as like how taxi drivers run out seeking their next customer. Transfix argues this as a weaker way of comparing emerging technology. That largely comes from the fact that this style of shipping will match drivers up with freight and overcome one of the biggest problems facing the industry: no trust.
Looking at the Lack of Trust
Many problems have arisen from the lack of trust in the industry. First, they don’t believe the people when it comes to them saying what they’re going to do. You have a common problem where retailers, manufacturers, and trucking companies back out of contracts and fail to live up to their end of the deal as economic conditions shift. During one earnings call with USA Truck, the CEO praised the shippers who stuck with the contract. USA Truck took a beating in the last quarter, where they had their earnings slashed from $2.5 million to $1,000 in profit. It sounds unreal. Everywhere else, signing a contract becomes a legally binding document that keeps both parties honest. A lot of people have learned with trucking contracts, however, that they don’t have much for a bite if you don’t follow through with them. As a result, people back out of them all the time. This creates a general atmosphere of distrust in general.
Volatile Market
The trucking industry currently suffers from a volatile market, and a number of trucking companies have filed for bankruptcy in the last year. They went belly up. In 2018, the trucking industry saw one of its most prosperous years as it added more than 100,000 jobs to the market. On a nationwide scale, 7.8 million people work as truck drivers, but sooner or later, the economy changes.
Putting Trust Back into the Market
Using a digital freight marketplace could inject trust back into it with all parties involved. Everyone receives more protection. Through automated technology like Transfix, you can get paired up with a load in 30 minutes. Compare that with traditional brokerages, and it takes anywhere from two to three hours. In some cases, a traditional brokerage will struggle to understand the location of the freight, the best way to budget, and other basic data points. They will identify the best way of making trucking more transparent for all parties involved. Through automated technology, you do away with many of the issues that can arise. Not to mention, you get real-time information on some of the essential aspects like:
- Trucking location
- Pricing
- Transactional information
Having this information restores trust in the trucking community and with third parties because everything becomes more available. When you have this type of transparency, it addresses the issue of trust in the community that has caused many of the other problems to occur. The other goal becomes about optimizing how repeat services happen with this technology. Transfix has paid special attention to these aspects within the trucking industry.
Creating Better Outcomes
Everyone in the trucking industry seeks to create a better outcome. Adding transparency into the mix, people display a greater willingness to talk about some of the issues arising. In addition, people can express their objectives more clearly to achieve higher profits and lower expenses more easily.
Emerging Technologies: Making Things Easier
As technology continues to advance, many aspects of society have begun a new transformation. The manufacturing processes and asset and inventory management have seen better communications capabilities because of IoT sensors. Meanwhile, machine learning and artificial intelligence has reached new levels of understanding. This drastically improves how a company can interact with the data given. Many people have described the pace through which these technologies have been emerging as extraordinarily frantic. As soon as one piece of technology comes through, you already have another useful software coming up the pipeline. The fast-emerging technologies have shifted how businesses operate on a fundamental level.
Rethinking the Business Model
One of the advantages of this technology pulling through so fast comes from the fact that trucking companies now have more ways than ever before to turn a profit. Using the data acquired through the technologies, you can identify your weakest points to reinforce them. In this way, you continue to improve your company’s profit picture year after year. People saw technology as an unnecessary hindrance in the past. Today, your business hinges on the quality of your technology because you can improve much of the way things work.
Will Digital Freight Disrupt the Market?
Many people wonder if this newly emerging technology will reinvent the way that trucking takes place. You have a couple of promising reasons for why it could change the industry. However, you have a few reasons why it could fail to cause a disruption. First, you have the tyranny of complexity that continues to plague this industry. You have many regulations that shippers have to follow to succeed and to avoid expensive fines. Many times, these shipments will be transported from one part of the country over to the next. This gives rise to problems with the origin and getting it to its destination. Coordinating everything will be essential for a successful project.
Finally, this technology fails to consider crucial facts: Things go wrong with freight all the time when transported over long distances. How will technology address these issues? Without understanding these vital things, the developers at Transfix and other digital freight marketplaces will struggle to make it profitable because people will look elsewhere.
How the Digital Freight Marketplace will Work
You have a few ways that this technology will operate. First, it will take many shippers and carriers and congregate them into a single place. Second, it will match up the shippers and the carriers with each other. Third, it provides people with solid tools that can be used to improve their business. Fourth, this will develop, maintain, and enforce the behavior so that it develops trust in the community.
This industry could eventually overtake the traditional brokerages because you have many benefits with using this technology for ongoing improvement. If this technology succeeds, it will either have to equal its rivals or, better yet, outperform its rivals. Whether or not it will achieve success, time will tell. Some people have high hopes for this technology because it will make things much easier for them to manage. Even if it doesn’t work right away, we could see improvements that will lead to the technology being adopted.
