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The trucking industry is in a phase of digital transformation, with connected devices bringing greater visibility and transparency across the supply chain. The installation of telematics devices in trucks has jumped exponentially and will cover nearly half the trucks in operation in North America by 2025.

In an era of smartphones, smart cities and smart mobility, the North American trucking industry is headed toward its “smart” future. This is pushed by the 2017 mandate that heavy-duty trucks be equipped with electronic logging devices that digitally track how long truckers drive each day to make sure they comply with federal rules.

A key segment of the trucking industry that has struggled to digitalize is the brokerage process. Digital brokerage solutions – whether digital load boards DAT or Truckstop.com or automated-on-demand solutions like those offered by Convoy, Uber Freight, Loadsmart, Transfix, Next and Freightera – are modernizing the brokerage process. All are using technology to automate and remove redundancies.

NOT EXACTLY NEW

Silpa Paul, Frost & Sullivan commercial vehicles industry analyst Silpa Paul

At least 40 companies are attempting to digitalize and/or automate brokerage in just North America. Yet, digitalization is not new to trucking.

Popular loadboard DAT started in 1978 as dial-a-truck out of a truck stop in Portland, Ore., before it launched its satellite communication-enabled brokerage solution in 1995. The second largest load board in North America, Truckstop.com, launched in 1995.

UShip has connected consumers who need to ship oversized loads to truckers since 2004 and now also brokers palletized commercial goods.

EMPTY MILES, LOW MARGINS INCENTIVIZE DIGITALIZATION

More than 70 percent of all freight is moved via road in North America. Of this, the for-hire market accounts for 60 percent, with nearly 34 percent of that market in turn accounted for by spot brokerage. At present, however, road freight capacity utilization levels are highly inefficient. Commercial long-haul trucks in the region typically operate with 25 percent empty miles – driving without a load – and 56 percent load efficiency which, combined with lengthy asset-idle times, has resulted in low margins for the trucking industry.

Empty miles account for a staggering 25-40 percent, depending on the type of operation, of total road-freight miles every year in North America. This translates to fuel waste, non-productive emissions, lost driver hours, inflated operational costs and unnecessary road congestion.

Such empty miles primarily result from the inherent opacity and slowness of traditional road-freight brokerage processes. The traditional brokerage process is challenged by the sheer magnitude of fragmentation in both demand (over 100,000 shippers and 16,000 brokers) and supply (over 240,000 small-medium carriers plus owner-operators).

Enter digital brokerage solutions. Digital brokerage solutions are of two types: digital loadboards and automated on-demand brokerages. They depend on data exchange between the plethora of connected devices in trucking and top it off with algorithms to provide everything from simple load listing and tracking to advanced instant load/carrier selection, pricing and bidding functionality.

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About Silpa Paul

Silpa PaulSilpa Paul, Team Leader – Commercial Vehicles, Mobility industry analyst. Paul has published more than 30 research studies covering trucking and logistics.

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