There’s a lot of discussion today about the capacity shortage in trucking. Finding trucks for available loads is more challenging than ever for shippers and brokers. The reality, however, is that there’s a lot of inefficiency in the way that matching takes place today. What are the challenges with the traditional freight matching process? How are advancements in technology enabling a more efficient approach? What benefits are companies achieving.
Stale Information and “One Load Wonders”
“If you look at the traditional brokerage process today, brokers are making 30-60 calls to cover a load, using information from load boards, emails, spreadsheets — but they’re handling a lot of stale information,” said Gollapalli.
“For example, you’re a broker calling a carrier. You probably saw this carrier on a load board who had posted his availability a day or a few hours earlier. By the time you call the carrier, he is no longer available. The underlying problem is that you are dealing with a lot of stale, historical information, instead of real-time, accurate information.”
But there’s another problem that is even more profound.
“If you ask any broker, they have thousands of carriers that are qualified in their system, but over 90 percent of those carriers are ‘one load wonders’,” said Gollapalli. “What that means is that a carrier picks up a load for a broker, but once the load is delivered, the carrier falls off the broker’s radar. The broker has no idea when this carrier is available again in the future to deliver any of his loads. So brokers put a lot of time and effort qualifying a carrier, but they only get one load out of it.”
Everybody talks about how we need more drivers and trucks, but there is a lot of inefficiency in the brokerage world today, driven primarily by stale information and the “one load wonder” problem. “[Adding more trucks and drivers] is like hemorrhaging blood out of one arm and putting blood back into the other arm to try and counter it,” Gollapalli said. “We all know that’s not an efficient solution.”
Smarter and More Efficient Freight Matching
While there are many startups that are trying to disintermediate the brokerage industry, Gollapalli believes that the best path forward is to make brokers and the freight matching process smarter and more efficient.
Not surprising, technology is playing a critical role here. For example, we’ve seen a lot of interest and demand for real-time freight visibility solutions in recent years, enabled by smartphones, mobile apps, and other GPS-enabled devices. A lot of these solutions are currently being used to track the status of deliveries from pickup point to final destination. This real-time visibility enables companies to take proactive action if things don’t go accordingly to plan — that is, it enables them to reschedule, resequence, or reroute pickups or deliveries, and to proactively notify customers of delays and updated Estimated Times of Arrival (ETAs), which gives customers time to readjust their plans and reallocate their resources.
These real-time visibility solutions, however, are now evolving to enable more efficient freight matching. “We are not only able to see where the truck is right now, but we can also look into the future to determine where and when that truck is going to be available next,” said Gollapalli. By having this forward visibility to available capacity and coupling it with available loads and applying certain business rules, brokers are able match loads with capacity much faster and more efficiently than they do today.
In addition to GPS-enabled devices, mobile apps, and freight matching/predictive algorithms, what are some other critical building blocks to enable this new approach to freight matching?
“You can build the best [technology tool], but if you don’t have a critical mass of carriers, especially small carriers that haul most of the freight in the market, then people won’t use it,” said Gollapalli. He also highlighted the importance of confidentiality and privacy. “This is a relationship platform and everyone wants to protect their information. In a public marketplace, such as load boards, everybody is reluctant to put their information out there, which leads to the stale information problem.” Therefore, the ability to define and apply business rules, especially around what information is made available and to whom, is very important.
So, how are brokers using this new freight matching process and what benefits are they achieving? What’s next when it comes to enabling smarter approaches to freight matching? What new capabilities or innovations are on the horizon?
I encourage you to watch the rest of my conversation with Prasad for additional insights and advice on those questions and more. Then post a question or comment and keep the conversation going!