Logistics firms lose money when vehicles return empty after delivering freight. This is an issue for the motor transportation segment, which accounts for almost a third of the market. Ill-thought-out transportation has an adverse impact on not only revenue but also environment due to additional emmision of carbon dioxide into the atmosphere. Is it possible to save fuel, decrease the number of miles traveled, and make the most of the cargo capacity of vehicles with less damage to nature? It is – with a digital freight marketplace.
The current state of the freight transportation sector
According to Statista, in 2020, the value of the world logistics market amounted to $8.6 trillion. The leading position belonged to the Asia-Pacific region with a freight turnover of $3.9 trillion, followed by the North American market amounted to $2 trillion.
Motor freight transportation is the largest segment in the transportation sector, accounting for €1.8 trillion.
This segment faces a range of challenges affecting its performance:
- Shortage of staff.
The workforce issue in the logistics sector has worsened. Experienced drivers leave their jobs for higher pay, more perks, and better working conditions. Young specialists don’t find the traveling work format and the sedentary lifestyle attractive. According to BBC, there is an acute shortage of truck drivers in all countries:
- the USA – around 65,000 specialists;
- Canada – 25,000 specialists;
- the UK – 100,000 specialists;
- Poland – 120,000 specialists;
This situation persists, so the industry is seeking digital solutions for logistics to handle the growing number of supplies with the same number of drivers.
- Rising fuel prices.
The rise in fuel prices implies more expenses for logistics firms. Businesses have to raise prices for their services to stay in the market, making consumers pay extra money. Besides, organizations have such expense items as tire replacement, vehicle servicing, and truck repair. That’s why companies are looking for options that will help them reduce fuel and maintenance costs.
- Environment protection.
Freight transportation causes more greenhouse gas emissions than manufacturing, electricity generation, agriculture, and other industries. In light of this, logistics firms are investing in strategies aimed at reducing emissions of harmful substances into the atmosphere. This is a hot topic for countries that has set emission standards – up to 95 g/km. The rate varies depending on the weight and load of the truck, but this metric is important to consider when loading goods.
- Freight tracking issues.
There are the following cargo delivery issues in the industry:
- unprofessional behavior of drivers;
- vehicle breakdown on the road;
- inaccurate compliance with contractual obligations;
- theft of goods and other unforeseen situations.
A secure supply chain requires obtaining reliable information quickly. It is important for a freight forwarder to see the status of their order and know the location of trucks and the exact time of arrival.
In order to resolve these issues and improve their supply chains, more and more companies are asking IT vendors to develop logistics software for their business needs. Allied Market Research expects that the industry is going to face two major trends:
- The use of smartphones will increase. Freight forwarders will search for carriers using mobile devices, especially since mobile apps for improving operation efficiency are gaining momentum.
- Freight forwarders will turn to digital freight marketplaces more often. The firms operating in the industry are already investing in trucking logistics software – web or mobile apps connecting a freight forwarder and truck drivers. They mainly rely on smartphones, are equipped with GPS, connected to the Internet, and have powerful processors.
One of the most striking trends in the sector is the transition from individual digital solutions for logistics to marketplaces. Now let’s scrutinize the essence and benefits of this type of logistics software.
How a digital freight marketplace works
A digital freight marketplace helps a freight forwarder quickly find a logistics firm that will deliver their goods in the required time.
Such a platform allows forwarders to leave a request for cargo delivery, specifying:
- start and end point of the route;
- desired mode of transport and its additional characteristics;
- goods to be delivered, indicating the weight, volume, and type of packaging;
- loading and delivery dates;
- contact details of the freight forwarder and the recipient;
- payment for the work performed, and other information.
In addition, a goods owner can view the list of transportation system development companies to choose from, pay for the order, and track the status and location of their cargo.
A logistics firm can post its offer on the platform:
- point of departure;
- the number and capacity of trucks;
- availability of vehicles;
- cost of services.
Via the platform, a freight carrier manages such operations as reservation, contract signing, negotiations, invoicing, and delivery confirmation. Drivers apply for jobs faster, as this doesn’t require going to the office.
Moreover, a forwarder and a carrier can chat using the platform, notifying each other about changes or agreeing on more favorable conditions. Customers choose a reliable executor, monitor their orders, save time, and are confident that their rights are protected. Most documents can be sent, verified, and digitally signed right on the platform.
Forwarders and carriers’ problems that a digital freight marketplace resolves
Trucking logistics software makes last-mile delivery more expeditious and secure. Such results are achieved by means of:
- Cloud data protection
Logistics firms work with a large amount of data that needs to be protected from corruption and theft. Via the cloud, information is transmitted in a faster and more reliable fashion because end-to-end encryption makes it unreadable for malefactors. Since additional protection methods are used – such as authentication, access control, secure deletion, etc. – data in the cloud remains safe.
- AI introduced in batch order processing
As the number of freight forwarders on the platform grows, processing orders becomes more complicated – especially during holidays and seasonal periods. The AI technology built into the app will automatically distribute packages of orders for 24-hour delivery.
- Additional ways of communication
It is convenient for drivers to have a system collecting information from various sources. Digital freight marketplaces may have a helpdesk that advises the driver on cargo transportation.
- Trust ensured between strangers.
A digital marketplace provides freight forwarders and carriers with a means for monitoring and managing orders – basically, GPS, forms for viewing the status of an order, and chats. In order to register on the platforms, truck drivers need to undergo verification: face scanning, license check, vehicle data assessment, etc. All this is important for establishing trust between the supply chain participants. These functions should be considered when developing logistics software.
- Rewards for diligent drivers.
The platform tracks statistics of trucking activities. If a driver performs more than 200 activities within a month, they receive a reward: coupons for fuel, health insurance, or free car service. Such incentives increase the retention rate and work as good brand advertising.
- Accurate spot pricing.
Spot freight rates change every hour. A digital marketplace automatically calculates a spot quote and can predict a spot rate if there is enough information for that. This function makes pricing transparent and attracts new clients.
- Comfortable working conditions for carriers.
Marketplaces help transportation companies create more favorable working conditions for their drivers. The program makes it possible to group several drivers living in different cities to conduct a single freight transfer. The entire route to the point of destination is divided into sections and allocated to drivers living in these areas.
Each employee travels a certain piece of the route and then passes the vehicle to their colleague. Thus, freight is delivered on time, and the drivers are happy because such a convenient schedule makes it easy for them to maintain a good work-life balance.
Digital freight marketplaces: capabilities and prospects
Digital marketplaces open new opportunities for logistics companies and freight forwarders:
- Companies set quotes, communicate with carriers, and pay for orders online.
- It is easier to compare prices for services and form costs.
- Firms can offer new delivery options at customers’ requests.
- Vehicle capacity is flexibly adjustable.
- Additional drivers can be instantly involved and connected.
- A transportation company is able to transfer freight from several forwarders at once, so its trucks never go half-empty.
- The program automates invoicing.
- All documents are filled out on the platform. It takes less time to create, send, and receive them compared to the traditional approach.
- Freight forwarders don’t have to spend hours calling carriers to find and book the required number of trucks and discuss delivery details.
The platform creates favorable development conditions for the freight transportation market, helps forwarders and carriers swiftly find each other, and ensures reliable delivery, good management, and better service.
Four things to consider when developing logistics software
A recent study on supply chain automation found that the ideal ratio between technology and people in freight transportation is 58% and 42%.
Only 29% of freight forwarders prefer to book freight in the traditional way – i.e., without the involvement of technology. The rest 71% rely on a digital experience or a combination of software and people.
In order to ensure the success of freight transportation search and reservation, consider the following four criteria when looking for or building a digital marketplace:
- Easy search for carriers. The platform should include a sufficient database of logistics companies to make it convenient for the customer to plan freight delivery.
- User-friendly interface. A good digital platform doesn’t complicate the search with an incomprehensible structure. Users need to quickly accomplish their tasks: create orders, track cargo, manage documents, and so on.
- Large carrier network. The platform should offer a sufficient network of operators to meet the demand of a forwarder – for example, 75,000 drivers who transfer 10,000 cargos every day.
- Implemented AI. Platforms for freight transportation works with a huge amount of data. AI is known as one of the most powerful tools for working with Big Data. If trucking logistics software is driven by AI, it is efficient for sure.
New technologies and automation are necessary to survive in 2023 and beyond. Collaboration with an appropriate vendor that will help to introduce digital solutions for logistics to a freight transportation system is essential for any modern logistics organization.
The IT service provider Andersen can become such a vendor for your business. The company’s staff consists of more than 100 people ready to develop IT solutions – from order management software to digital freight marketplaces – to improve your supply chain. Andersen’s experts have already delivered a solution to manage supply chains and freight, a logistics solution for eCommerce, a platform for grocery delivery in the CIS, and other IT solutions.