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By Mark Montague, DAT Solutions
It seems like a week didn’t go by in 2015 without another startup introducing a mobile app to help shippers find available space on trucks.
Riding the coattails of Uber, which matches car drivers with people who need a ride around town, these "Uber for trucking" apps let shippers post freight to a web site where carriers view it on a mobile device and partake in what amounts to a "reverse auction."
It’s supposed to bring cost-efficiencies to the freight transaction. The trouble is, the promise of lower costs is based on a) the freight going to the last, lowest bid; and b) dis-intermediating the "middle man," the freight broker.
The value of knowledge
We’d all like to keep transportation costs in check but disintermediation isn’t necessarily the way to do it. Getting freight from Point A to Point B — safely and on time — takes a lot more coordination than simply swiping a mobile app.
One reason shippers entrust their freight to brokers and 3PLs is to ensure high-quality service. Many have reduced staff in their transportation and logistics departments due to recession-related budget cuts.
With fewer in-house pros available, shippers need brokers and 3PLs with a deep understanding of cargo insurance, scheduling and transit times, routing vagaries associated with moving high-value or hazardous freight (i.e., food products, electronics, medical equipment, and chemicals), and requirements for moving goods across borders.
Shippers have to ask if disintermediation is worth it if it means sacrificing the knowledge and experience required to make freight flow smoothly.
Pricing transparency
If 2015 was the year "Uber for trucking" became a
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catchphrase, 2016 should be the year of pricing transparency.
Technology is transforming the industry, but it’s through the use of dynamic pricing models that spur an almost continuous bidding cycle throughout the year. Shippers and brokers can benchmark freight rates based on actual transactions — what carriers are actually being paid by load providers — on single or multiple lanes. It’s not just for big 3PLs. Shippers can get the same tools.
Whether you’re a business with freight to move or you have trucks to fill, learn about the cargo, demand and availability of trucks, and current rates at the origin and destination of the load. You can use trade publications and economic reports for background. For specific rate guidance, the rate tools found in load boards, or advanced freight rate tools like DAT RateView, provide the best information available.
As we enter the new year, we have greater access to more data than we ever have before. When you educate yourself about the market and have the knowledge to put that information into context, you can have a win-win deal that’s geared for the long-term — not one that’s based on a spontaneous tap of an app.
Mark Montague is industry rate analyst for DAT Solutions, which operates the DAT® network of load boards and RateView rate-analysis tool. He has applied his expertise to logistics, rates, and routing for more than 30 years. Mark is based in Portland, Ore. For information, visit www.dat.com.
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