Digital Load Matching — Opportunities & Challenges
The business of digital freight matching — using phone apps and other platforms to pair shipper demand with carrier/trucking capacity — is an emerging trend in the intermodal industry. What are the opportunities and challenges that come with such technology?
First, one thing to keep in mind, Coyote Logistics Senior Vice President of Business Operations J-Ann Tio told Intermodal Insights, is the common perception that logistics providers didn’t use matching technology prior to the growth of digitalization within the supply chain is not the case.
"Instead, through digitalization, carriers now have access to available loads, live tracking, shipment recommendations, and rates at their fingertips," she explained. "They no longer have to be reliant on their sales representatives to access this information, which provides additional visibility into opportunities that might not have been available through a more traditional load matching process."
She added that digital freight matching, also known as on-demand trucking, allows for carriers to make real-time shipping decisions day or night, whenever it works for them.
"Having access and visibility into freight opportunities that make the most sense for their companies, without wait time, is a major advantage," she said.
However, she said, even with these benefits, some carriers will still prefer to work through a sales representative to vet and book freight on their behalf.
"It ultimately boils down to the carrier’s preferences and bandwidth to manage this process on their own," she remarked.
Vincent Paperiello, chief solutions officer, Hub Group, added that the traditional freight matching environment is built on the strength of relationships between brokers and carriers, and that those long-term relationships can bring value in turbulent markets.
"Carriers can find business to keep moving in down markets, and brokers can find capacity with their long-term carriers when the market tightens," he explained. "The traditional model also enables small and mid-sized carriers to compete in markets as the broker acts as an extension of the carrier’s sales force and in some cases is the carrier’s sales force."
"The traditional model is labor intensive and inefficient, with high turnover as traditional brokers churn heavily commissioned sales and carrier reps," he continued. "The model is also highly focused on the transactional spot market and does not provide a truly reliable source of capacity for shippers or demand for carriers for critical and high service freight."
'A Balanced Approach'
With the differences between traditional and digital freight matching being what they are, are there any specific types of companies that would benefit more from adopting digital freight matching, and are there types that might be better off sticking with traditional matching?
Tio said that all types of companies can benefit from adopting digital freight matching solutions into their operations, but offering a blend of both traditional and digital capabilities allows her company to cater to the unique needs and preferences of each shipper and carrier.
"While some may lean towards more traditional load matching techniques and others towards digital, a balanced approach can offer the best of both worlds," she explained.
"With the evolution of traditional load matching, both large and small carriers can not only work with their sales representatives on per-load transactions, but also benefit by booking dedicated freight opportunities," she continued.
"On the digital side, for owner-operators that might not have flexibility or the opportunity to book their next load when in transit, the ability to access available freight and book loads whenever and wherever works best for them is a huge advantage. Likewise, larger carriers benefit from adopting digital freight matching solutions because the advanced visibility into their networks and truck locations allows their dispatchers to work ahead and optimize their plans."
Paperiello said that Hub Group has seen that commodities-driven companies are more likely to adopt digital freight matching.
"These companies are generally procurement minded, highly cost conscious and comfortable with purchasing transportation as a commodity. Their focus is on procuring the lowest prices rather than on service," he explained. "Digital load matching also gives smaller shippers wider access to all available capacity in the market."
"Companies that are concerned with quality of service and reliability are better off sticking with traditional load matching," he added. "Through traditional load matching, shippers receive greater certainty of capacity at less volatile price points."
Brent Hutto, an executive with the online marketplace truckstop.com said that digital freight matching helps even the playing field for companies that aren’t big players.
"If you’re a small trucking company — and most of our customers in our part of the marketplace are very small carriers, one to 10 trucks — every load is a single transaction. Being able to select it digitally on a freight matching platform is a huge benefit, because it allows them to get the freight they want faster," he explained.
Like any technology, digital freight matching comes with its own set of challenges. But Kevin Abbott, vice president of Truckload, C.H. Robinson, said that there are a few steps to take to ease those challenges.
"To master digital freight matching requires forward-leaning technology built by and for supply chain experts; an information advantage that takes into account experience, data and scale; and being able to rely on people with expertise on a global scale," Robinson said.
The industry, he said, is "still largely in the geographic proximity and instantaneous communication game. To move up in the hierarchy requires smarter digital solutions and the application of advanced technologies such as artificial intelligence and predictive analytics."
"Seismic changes are happening in logistics, and the CIO is at the center of this revolution," he continued. "In the future, those who see the digital transformation not as a threat, but as a shape-shifting business opportunity, will be able to compete and win in logistics. Those who don’t will be left behind."
Hutto added that freight matching is bound to be affected by the greater adoption of telecommuting brought on by the COVID-19 pandemic.
"One thing that’s fascinating about the digital marketplace is that when you think about the automation of anything, you think about efficiency and how that helps people move faster. Now, think about the application of that into a new way that companies are going to do their business with people working from home," Hutto said. "A vast percentage of us may never go back to an office like we used to. I think that’s going to speed up the process of adopting automated processes. That will shape a lot of the ways these systems are utilized within companies."
'A Hybrid Model'
Despite predictions that digital freight matching will increase in usage in the coming months and years, one thing that the goods transport industry isn’t likely to see, at least for the foreseeable future, is the phasing out of traditional matching altogether, experts say.
"Even with digital freight matching continuing to grow and evolve, there will always be room in the industry for both," Paperiello said. "Digital freight matching solves the economic part of the equation. With a few clicks, shippers can find available capacity at the best price. But, as we all know, traditional freight matching solves the operational and customer service part of the equation by involving the right people to resolve unplanned events like when a truck breaks down, a snowstorm creates an impasse or a railway becomes unusable. Both the economic and operational components are necessary in the freight matching industry."
"Additionally, specific to intermodal, which requires greater supply chain planning to accommodate factors such as extra transit time and blocking and bracing requirements, for example, the business is heavily contract weighted and not as transactional in nature," he added.
Tio added that a Coyote Logistics research study has found shippers and carriers agree that optimal supply chain management occurs when a hybrid model is used.
"Digital solutions are best for driving efficiency, collecting data, and supporting automation while offering self-service tools and features," she stated. "Alternatively, the human interface is preferred when decision-making, data analysis and problem solving are required."
"This demonstrates," she said, "that the industry prefers to have both options available to them on a case-by-case basis."