Digital freight brokerages have been getting a lot of coverage recently, in part, due to their association with big brand names (including a rather large ride hailing app), large venture capital investments and substantial revenue growth. Like all new and shiny things that hit the market with large amounts capital to burn and a techy angle, they are making a splash. Whether they are more of a threat than a signal to other more traditional, established freight brokerages is an open question. For produce shippers, automation for efficiency is good, but keeping humans in the freight brokerage loop might be for the best.
Transactional interactions will be the biggest difference you will see between a digital freight brokerage and a traditional freight brokerage today. If you want to get a “live freight rate” instead of sending an email or making a call, you can get the price and book online with a digital brokerage. Shippers have had this option before; it’s not certain how this will change things now. Contractual interactions (most transactions in freight transportation are contractual) won’t see much of a change to how business is done. You will still negotiate a price and volume over a period. You may be able to do that online someday; however, where hundreds of thousands of dollars are negotiated, it might sense to have a meeting or phone call first.
For larger shippers that operate on electronic data interchange (EDI) already (which is most enterprise level shippers), there won’t be much change, as most shippers at that level require third-party tracking apps already. For smaller and midsize shippers that have never had minute-by-minute tracking ability, digital freight brokerages have a slicker customer interface edge for now. Most mid-size brokerages and larger offer at least periodic tracking through third-party tracking software.
Most data that digital freight brokerages are collecting isn’t new. There is a greater emphasis on data and transparency in today’s markets. Again, shippers on EDI most likely wouldn’t see a big difference between data from a digital versus traditional freight brokerage. Produce shippers may receive even less utility from reporting due to higher volatility, sensitivity to externalities (like weather), and seasonality changes year-to-year decreasing the usefulness of projections.
Produce season can be a hectic time. Digital freight brokerages pride themselves on their ability to save money by taking the human out of the equation as much as possible, and to run on 3 percent margins for the foreseeable future, it makes it hard for digital freight brokerage to assign personnel to make your problems their problems. Things as simple as communication with multiple sheds and coordination of pick up times will make working without a human partner a difficult proposition. What about if you need to change a pick-up location at the last minute? What if the product isn’t ready to pick up yet? It might be easier to just be able to pick up the phone and talk to your tried and true human partner who is responsive, timely and flexible.
Part of the reason there needs to be such trust between produce shippers and transportation providers is that produce is a commodity that you don’t get second chances with if the something goes wrong. If the product shifts or the refrigerated trailer isn’t set to the right temperature or any other number of reasons, there will be a freight claim. Without the human element involved in this ever-changing section of transportation, the integrity of the shipment may be at risk. Reputation and track record down to the driver level need to be carefully considered. Is that driver going to be empty with enough time to make you picks, or is he at a previous receiver that is notorious for holding drivers? Does that driver sound new or inexperienced to the carrier for your load? It often takes a conversation with a human to uncover if there are any potential issues that might need to get resolved.
(Jordan Strawn, chief sales officer, and Mike Ryan, senior director of business development for ReedTMS Logistics)
