For many years, the freight industry has followed the same paradigm. There are the shippers trying to move their goods from one place to another. There are the carriers that provide the transport service that delivers such goods safely and on time. And then there are the freight forwarders and brokers that manage all of the logistics that go into such an endeavor. But technology is changing how these companies connect, communicate, and handle supply chain management.
So what lies ahead for the future of the transport, freight forwarding, and logistics industry?
Some say Big Data. Others say it is the ‘dimensionalizing’ of shipments. But perhaps, most interestingly, is the advent of Freight Exchanges.
What is a Freight Exchange?
Freight Exchanges are essentially an online virtual marketplace for carriers and shippers. This is where carriers can advertise unfilled, open spaces on their transport, and shippers can search for and connect with carriers that travel on the specific routes they are looking for. This has given rise to more freedom of choice within the shipper-carrier dynamic. At one time, all parties involved had to rely on longstanding relationships to find more delivery options and opportunities. Now, carriers can easily find new clients that require their services, often at the last minute, and shippers and brokers would be able to expand their network of shipping routes as needed.
How quickly will Freight Exchange service become a dominant force in the U.S.? Seeing its influence only require a look across the Atlantic.
In Europe, it only took a few short years for Freight Exchanges to take a strong foothold in the transport industry. Thousands of companies there now depend solely on exchanges, as it has helped make the shipping network, which often crosses many International borders, more manageable to access. When sending goods abroad, shippers and brokers can also rely on the carrier’s knowledge and experience with international and local laws, foreign languages, etc. that they may not be familiar with.
In the U.S., where the bottom line is a priority, perhaps most important aspect of Freight Exchanges is how it can open the possibilities for more competitive pricing. When there are so many more carriers available to choose from, shippers and brokers are able to compare and contrast more accurately, and then negotiate a fair price that meets their budget. This is an advantage especially for smaller companies and start-ups that are looking for ways to drive down shipping costs as they grow their business.
Built in Reputation
Joining an exchange also allows for shippers, carriers, and brokers to better vet each other, read and submit any reviews, comments, and feedback. Whereas in the past, choosing a new carrier to trust to make a delivery was a long process and sometimes took a leap of faith, but real-time input has made it much easier to connect with a reputable service and thus avoid a bad freight. Real-time data analyses have also made it possible to watch a company’s success rate change as it develops.
Ease of Use
Freight Exchange services have honed their website and interfaces to be extremely user friendly for finding or advertising loads, or finding or advertising a vehicle. In most cases, it’s as easy as entering the shipment origin and destination into a form. Communication is then opened between the shipper and the carrier, and negotiation is left up to them. Software platforms provided by broker services such as GlobalTranz are continuing to that aid in connecting shippers and carriers, loads and transport.
No More Empty Return Loads
One of the most practical advantages of a Freight Exchange system is that it gives carriers and brokers a greater chance to guarantee a full return load. Too often, return loads end up being empty, which is a waste of fuel and can drive up costs. With cloud-based software, carriers can fill their empty transport by connecting with shippers at their destination.
Future of the Transport, Freight Forwarding and Logistics Industry
The growth of Freight Exchanges and their influence on the future of the freight industry will be significant. As elements such as Big Data become more tightly integrated, brokers, forwarders, shippers, and carriers will all have access to comprehensive information and analyses that will allow them to work together more efficiently and reach their respective goals. And the immediate benefits are just as attractive for new adopters – greater sustainability, healthier competition, and more options available for companies of all sizes looking to enter the market, distribute their products, or start up a new shipping venture.