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September 20, 2022

What Is Digital Freight Brokerage?

DATA SPOTLIGHT

The private freight market in North America is constantly evolving, with new trends emerging and receding, often over the course of a short space and time. So, it can be difficult to know which to track and where to invest in order to maximize transportation management systems. However, one trend that has taken off in recent years and looks set to become a mainstay of the supply chain is digital freight brokerage. But just what is it and how does it work for shippers of all shapes and sizes? 

Essentially, digital freight brokerages are online marketplaces that allow shipping companies and truck drivers to connect via the use of a digital app. Whereas traditional freight brokerages are carried out by phone or fax, often taking days or even weeks to organize, digital freight brokerages can connect shippers and carriers directly, often removing the need for a middleman and streamlining the whole process.

How Does Digital Freight Matching Work?

Startups have emerged in the freight space, using artificial intelligence and machine learning to create algorithms that can make more accurate predictions about how the market will operate. A more centralized approach to freight matching through the app also means that carriers find it easier to interact with customers and need to be on top of fewer data channels. In some cases, the apps are working so efficiently that truck drivers simply show up to their pick- up point and find preloaded trailers ready to go. This kind of efficient working speeds up the shipping process along the supply chain and allows greater productivity and transfer of goods to market in a speedier way. Valuable time can be trimmed off the shipping process at each connection, boosting profitability for truck drivers, too.

In this way, digital freight matching is be an important development in the shipping industry and one with benefits for all concerned parties. That makes it one aspect of industry development that no shipping company, customer or driver can afford to ignore.

Traditional vs Digital Freight Brokerage 

There are a number of digital freight brokerage apps now available on the market, as developers scramble to claim the biggest market share they can. This can make it a tricky decision for shippers and truck drivers in terms of knowing which one to use. However, this may be slightly missing the point. This kind of market share scenario will develop over time and it's easy for shippers to simply switch to the one they find most effective. The real key comparison should perhaps be between the new digitalization versus the old style of brokerage. Here it's really clear to see how the methodology is producing major advantages.

Digital freight brokers are completely automated, using technology that can run around the clock. That means it's not limited by traditional working hours and is more suitable for working across multiple time zones and in different languages. It's also a more convenient option for people who don’t want to use the phone.

Since digital freight matching removes the need for a middleman, this inevitably leads to lower prices. Carriers can post their own freight rates and truck drivers can choose whether or not to accept the cargo. Without the need for negotiating rates through a broker, the market will start to regulate itself. The lack of a middleman and real-time, 24-hour nature of digitalization can also save time.

Of course, this is not to say that the traditional freight brokers do not have their advantages. The removal of the human factor means it's harder to develop good working relationships which can be very advantageous to all parties.

Who Needs Digital Freight Brokerage?

At a time when the truck driver shortage is becoming a major issue for the freight industry across North America, there are many players across the sector that could benefit from digital freight brokerage, as outlined below.

Shippers

Smaller shippers often do not have long term shipping contracts, as this does not make a whole load of economic sense. As their needs for shipping are smaller and more infrequent, they need to access shipping as and when they need it. This involves using brokers, which puts them at the mercy of fluctuating pricing, seasonal shortage,  and the ongoing impact of the truck driver shortage. Using a digital freight matching service can help them to cut out the middleman and make savings on shipping, even during busy peak periods in the freight industry.  

Transport Business

Of course, it's not just customers and shippers that can benefit from digital freight matching. The matching of loads to available carriers in real time can help to streamline the shipping process, making loads more profitable and freeing up resources in other areas. Both carriers and shippers can simply browse the application listings to find suitable and convenient truckloads, based on the availability of carriers at any given time and in any market.

What Are the Advantages of Running Digital Brokerages?

There are several main advantages of digital freight matching (although there is also a significant number of smaller and subsidiary benefits). These include:

  • Improved carrier matching
  • Process automation
  • More efficient communication

Using a digital freight broker platform allows shippers and carriers access to a safe and secure environment for finding the right freight partners. There is a reduced need for manual entries and much less reliance on outmoded forms of communication, such as fax and phone calls, to get business done. In addition, many digital freight matching services can be integrated into existing transport management systems (TMS) to create a more complete logistics solution for any business.

The way businesses use third-party logistics is changing and becoming more efficient, thanks to the advent of technology and services such as digital freight matching. With the ability to construct shipments in real time, goods can get to markets faster, shippers can find more cost-effective transport solutions, and truck drivers and companies can streamline their processes to make loads more efficient and profitable. It really is a win-win situation.

For more information on FleetOps and our freight matching platform, explore the website or read the FleetOps blog for the latest updates in the trucking industry.  

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