Is there a 'Perfect Storm' brewing for brokers?

Is there a 'Perfect Storm' brewing for brokers?

Growth of apps is bringing freight to truckers' fingertips

We are on the cusp of the biggest event in transportation since the invention of the superhighway in the ’50s. The size of the threats we have—or the opportunities—are bigger than they’ve been in a long time,” said Noël Perry, senior consultant for FTR Transportation Intelligence, at a recent trucking conference in Dallas, TX. “The problem is that the precise timing of these events is not clear, even though the events themselves are. What it says is [that] we have to get ready before. If we aren’t prepared, we’ll be left behind.”

Internet Truckstop Group CMO Brett Hutto added to the conversation.“The owner-operator has been on his deathbed for decades, according to many market analysts—but many are doing quite well still,” he said. “There’s always a place for small players in the market because they have an infinite ability to adjust. It’s just like everything else: You’ve got to adapt and move forward.”

With the introduction of new and updated regulations, including electronic logging devices (ELDs), speed limiters, and entry-level truck driver training criteria, along with a shortage of truck drivers available to provide the capacity the logistics community requires, we do have a perfect storm for owner-operators and micro-motor carriers brewing. Hutto said it best: “You’ve got to adapt to move forward.”

But exactly what does that mean for the small trucking company?

Technology, technology and more technology. The days of not having computer and technology skills in order to be competitive in the freight hauling business are ending. The good news is the vast majority of the technology small carriers will require and need is generally affordable. However, and this is a biggie, don’t buy technology just because it’s available. If it’s difficult to master or takes an excessive amount of time to learn how to use, it’s probably not something you’ll use on a regular basis.

Let’s take a look at one area where technology is moving the industry forward: apps for locating loads and establishing hauling relationships with shippers and brokers.

The one that’s most talked about in the industry is the first ‘Uber-style’ app on the scene, Trucker Path. Fortune Magazine describes Trucker Path as an app that “aims to go further, digitizing not just the search for a load but also administrative processes that are still stuck in the past. After they locate an appealing load (often after scouring several load boards), today’s independent truckers must negotiate a rate by phone and exchange extensive documentation via email and fax (many truckers still carry fax machines in their cabs for the purpose).”

The Trucker Path website (truckerpath.com) states, “We’ve replaced load boards with an automated marketplace where truckers can find truckloads on their smartphones enabling them to increase revenues and improve cash flow. And brokers can automatically contract with their preferred and most reliable carriers.”

The general idea behind many of the Uber-style trucking apps is to assist truckers in filling available space with paying freight; others are taking the idea of the load board/freight factoring to the next level.

Convoy is designed to make it easy for shippers to connect with nearby trucking companies on demand, deleting inefficiencies and helping them book and track loads instantly.

“The goal is to use the technical experience a bunch of us on our team have to make a better experience for truck drivers and carriers, in particular independent owner-operators and small truckers,” founder and CEO Dan Lewis said.

Convoy’s idea is to eliminate the third-party broker for connecting a load to a truck, instead creating a direct relationship between shipper and trucker. The Convoy platform is currently up and running in the Seattle-Tacoma area. (convoy.com)

NEXT Trucking co-founder Elton Chung has been a shipper, broker, and carrier owner. He owns iDC Logistics, which specializes in electronics and delivers about 18,000 loads per year totaling approximately $2 billion of merchandise annually.

Chung designed NEXT Trucking to connect shippers directly with vetted truckers who are willing and able to carry the freight. Unlike Convoy, which has a limited area, the platform is targeting over-the-road trucking.

“We’re trying to eliminate the broker,” he told American Trucker. “We don’t need them anymore. As long as we know the shipper’s and trucker’s needs, we can connect them without paying for the broker.” (www.nexttrucking.com)

Traansmission has a different approach, according to Jason Cahill, co-founder and CEO.

“I, too, wanted to eliminate the middle­man—get rid of brokers like we got rid of travel agents through the use of Priceline.com,” he said. “Then I talked to truckers. This is what I discovered: Truckers have a love-hate relationship with brokers. But brokers aren’t going anywhere any time soon because brokers own and manage the relationship with shippers. And a point that cannot be overstated is that shippers have complete faith in their brokers.

“So here’s the real solution that will disrupt the industry—let’s help the brokers,” Cahill continued. “Make them the leaders of the trucking tech revolution. Empower brokers with big data capabilities that will transform the sector—and help increase incomes for both brokers and truckers.” (www.traansmission.com)

Other Uber-style apps for trucking include Cargomatic (local L.A. area) (www.cargomatic.com) and TransFix (transfix.io).

So there you are. These are some of the newest load-matching apps to research and test-drive to see if they will add value to your trucking operation and additional profit to your bottom line. Maybe, just maybe, this perfect storm can be fair winds and a following sea.

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