Supplier Spotlight

USPS has released revenue figures for the second quarter of 2018, which revealed the postal operator's shipping and packages revenue grew by US$445m or 9.5% (read more here). But how many more parcels did the operator handle between January 1 and March 31, 2018?

Analysis

« back to Analysis Listings

Online freight marketplaces: slow to develop

Digital freight platforms are popping up all over the place with Uber Freight, Transfix and Convoy being some of the more prominent examples. Now XPO Logistics has opened up its XPO Connect platform to more shippers.

These technology startups are supposed to make it easier and less costly for a shipper to match and book a truckload shipment with an available driver and truck.

The digital freight platform usually involves a website that allows the shipper to shop for space/route availability and price, and select a carrier. These platforms also allow the route driver to quickly respond to booking requests via a simple smartphone app.

There is no question that this technology is forcing change in the truckload selection process. However, the legacy phone call and fax model has been slow to go away, especially with the smaller truckload brokers and agents.

This begs the question, why have the digital freight platforms been slow to develop? Here are some of the reasons:

1. Legacy shipping manager model: Many small to medium-sized manufacturers and distributors still employ tenured shipping managers that are making truckload routing decisions. These individuals are less likely to embrace change and new technology.

2. Legacy truckload broker model adds perceived value: The traditional truckload broker model still depends on a sales agent that establishes a face-to-face or telephone-based customer relationship. Many shipping managers grew up with this personal touch and want to talk to broker sales agents regarding the particular nature of their load. There is also a perceived sense of security when shipping managers know they can reach out to their truckload sales agent to address service and rate issues.

3. Insignificant savings: The customer perception is that the digital freight model should be substantially less costly than the traditional broker model and that is just not happening.

4. Driver and truck shortage: The economy is heating up while there are fewer drivers and trucks, which is driving higher rates and limiting availability, thereby supporting the perception that freight marketplaces are not driving lower costs. Just the same, digital freight platforms will arguably have an advantage if the labor shortage persists due to the potential for optimization of loads through co-loading, and reduction of labor intensive management due to digitized processes.

5. Competition: The traditional truckload brokers are taking smaller margins and reducing sales agent commissions to remain competitive. However, this is probably a temporary condition.

6. Primary truckload brokers are offering direct digital solutions: The large brokers and carriers are offering their own digital solutions directly to their established and existing customer base while still having the option to participate in the digital freight marketplace.

Is there a future for tech in freight marketplaces?
Clearly, technology will help transform the truckload freight industry by improving utilization and transparency – Uber claims to be the only provider in the truckload market with 100% transparency – as it applies to shipment information and real-time tracking.

However, the point is that new technology alone won’t always be a better solution if not balanced with a human and personal touch or a supremely good automated customer experience, driven by things like interactive service management.

This will apply to the long-term success of the digital freight marketplaces so it will be the ones who plan and execute best that will be the winners.

 

Bios:
To contact the authors about the latest hot topics affecting the last mile delivery market, visit their LinkedIn pages:

 

Marek Rozycki is managing partner at Last Mile Experts, specializing in CEP and e-commerce last-mile advisory.

 

 

 

 

 

Dean Maciuba is a parcel industry expert and has previously served UPS and FedEx for 37 years across multiple professional positions in sales, marketing and operations. Today, Maciuba is the managing partner for North America at Last Mile Experts.

 

  

 

 

May 14, 2018

 

Read Latest Issue

Read Latest Issue

Exclusive Articles

Mark Bigley, CEO at Secured Mail, explores how supplier collaboration across retail delivery and fulfilment is a must for next-level service. May 21, 2018
Click here to read more


The John Lewis Partnership may fervently deny it held talks with Amazon about selling its Waitrose grocery stores – but whether it likes it or not, there’s no denying their acquisition would be a big win for Amazon. ParcelHero’s head of consumer research, David Jinks MILT, reveals why buying Waitrose would boost Amazon’s fresh food supply chain and create even more Amazon Prime members. May 15, 2018 
Click here to read more


Postal and Parcel Technology International talks to Frank Cianciullo about what opportunities posts in developing countries have when it comes to investing in automation technology. April 11, 2018
Click here to read more


Analysis

Mark Bigley, CEO at Secured Mail, explores how supplier collaboration across retail delivery and fulfilment is a must for next-level service. May 21, 2018
Click here to read more


The John Lewis Partnership may fervently deny it held talks with Amazon about selling its Waitrose grocery stores – but whether it likes it or not, there’s no denying their acquisition would be a big win for Amazon. ParcelHero’s head of consumer research, David Jinks MILT, reveals why buying Waitrose would boost Amazon’s fresh food supply chain and create even more Amazon Prime members. May 15, 2018 
Click here to read more


Digital freight platforms are popping up all over the place, but do they offer any advantages over the legacy systems? May 14, 2018
Click here to read more



Supplier Spotlight

Supplier SpotlightClick here for listings and information on leading suppliers covering all aspects of the postal technology industry. Want to see your company included? Contact helena.hunt@ukimediaevents.com for more details.

Submit your industry opinion

Industry BlogDo you have an opinion you'd like to share with the postal technology community? We'd like to hear your views and opinions on the leading issues shaping the industry. Share your comments by sending up to 500 words to helen.norman@ukimediaevents.com

Submit Your Recruitment Ad

Recruitment AdTo send us your recruitment advertising or to receive information on placing a banner please email helena.hunt@ukimediaevents.com