Within the last year, we have witnessed very tight truck capacity. Shippers have engaged the Spot Market to find scarce capacity at budget straining prices. The absence of transparency in the market, along with sourcing and pricing, also results in a lack of operational flexibility which leads new market opportunity service failure. With the technology we have in 2019, this attracts new market opportunity unlocking potential for real-time freight.
With new on-demand apps such as the Seattle-based digital freight broker, Convoy, the goal is to alleviate much of the “waste” in the transportation process. Shippers can now actively access guaranteed rates and book loads without ever making a phone call while maintaining consistent service.
“My view is that there isn’t a shortage of drivers; but there’s just a shortage of innovation which leads to the waste.” says Ziad Ismail, Chief Product Officer of Convoy. Apps such as Convoy provide the trailer, while the carriers access the app for available drop shipments and commit to moving the load. Using the platform, carriers and loads can be matched in as little as five minutes. This replaces multiple phone calls and faxes used to get quotes.
If pricing information and commitments are generated instantly, then the teams making network planning decisions would be more efficient and contracts would be more certain. The objectives of each shipper is to find a balance between rate certainty, reliability, and the cost. Spot freight, unlike contracts, can provide more reliability during tight capacity as long as the shipper is willing to take some market rate risk. Contracts generated with on demand logistics, driven by advanced market insight, can guarantee a shipper predictable rates at the time a decision has to be made. This idea is gaining quite a bit of traction with smaller shippers, and we can expect to see it grow throughout the years to come.
https://www.freightwaves.com/news/commentary-how-on-demand-freight-is-poised-to-transform-logistics
