By: Charen Ravi -- Research Analyst, Logistics and Transportation
20 March, 2018
Road freight industry transports nearly 70 percent of total freight moved in the U.S., totaling up the volume to 10 billion tons each year. Despite this volume, the industry’s progress has long been impeded by its fragmentation because small road freight carriers are dependent on intermediaries to transact business with shippers. More than 1 million U.S.-registered small trucking companies own 90 percent of all trucks, each owning about three trucks on average. This fragmentation creates the need for brokers to interact with multiple carriers on behalf of a shipper to determine their availability, followed by price haggling and back-office administrative responsibilities. Typically, these intermediaries rely on telephone calls to engage the suppliers and shippers, which is not the most efficient and cost-effective means of moving freight in an age of on-demand commerce. To overcome this middleman, several mobile applications were designed. The idea of such applications was initially experimented in early 2015. From then, many startups were registered and have developed their own platform for shippers to book available truck spaces for movement of their goods. These applications are shaping up to disrupt the trucking market by replacing the traditional middleman linking truckers to shippers and vice versa. The designers have also created algorithms that not only address the transportation needs between two parties, but also handle the financial logistics, such as billing and payment. Shippers are in need of truck availability just in time to transport their freight. Hence, the introduction of such application is a win–win strategy for both the shippers, as well as truckers. This article describes the advantages and challenges in using such applications to book trucking space for freight movements within the U.S., and how the U.S. trucking industry is expected to shape up in the near future by introduction of these applications, from a shipper’s perspective.
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