New digital freight brokerages are popping up at breakneck speed, and the growth is expected to continue over the next five years.
Trucking-as-a-service (TaaS) is expected to grow from its current size of $11.2 billion to $79.4 billion by 2025, according to a survey by Frost & Sullivan. Digital brokerages are expected to make up the largest share of the market.
As with any booming field, there will be winners that rise to the top. Choptank Transport President and CEO Geoff Turner, Trinity Logistics Chief Operating Officer Sarah Ruffcorn and J.B. Hunt 360 Vice President Shawn Graves sat down to discuss the characteristics of those winners during Transparency19. The conversation was moderated by FreightWaves President George Abernathy.
Abernathy asked the panelists to describe what “winning” means within their companies.
“We look at revenue and how many people are using the app,” Graves said. “The main thing is, you have to be sticky inside your app. You have to provide something for carriers to get entrenched inside the application they use everyday; that makes it difficult for them to leave.”
Graves said today’s competitive landscape drives J.B. Hunt to continually disrupt itself in order to stay ahead of the curve because carriers have plenty of choices. J.B. Hunt 360 currently has about 500,000 trucks on its mobile app.
For Turner, it is not enough to provide an app that matches trucks to freight. In order to attract carriers to Choptank’s platform, the company goes above and beyond to provide lifestyle-centered perks as well.
“Carriers, especially the smaller ones, are very savvy. I don’t think they get enough credit for how smart they are in the way they look at freight,” Turner said. “When the markets get tighter, they always want to make sure they’re getting the best deal. For us, it is about how much better we can make their life on the road. It is almost like a lifestyle app.”
Graves and Ruffcorn also talked about the importance of driving out the inefficiencies that plague the industry. Providing carriers with a service that cuts down wasted time increases their capacity, which can have a sizable impact of their bottom line.
The companies that come out of top will also have an emphasis on transparency, according to Ruffcorn.
“Where are they know? Where do they want to go? What are the types of data we can leverage with the shipments we have?,” Ruffcorn asked.“Creating a lot of transparency around what is in the market, whether that is ELDs [electronic logging devices ] or app tracking is going to be important.”
The panelists agreed that the cooling freight market has a positive impact on quick innovation in the digital brokerage space.
“I think it is happening it faster,” Ruffcorn said. “They’re quicker to adapt when they need loads, and the reverse is also true. The market today, in my opinion, is driving us faster.”
The entrance of digital brokerages has caused some tension within the industry, and questions about how these new platforms will impact more traditional brokerages are not uncommon. Turner, however, thinks new innovations will push the best companies to do better.
“When you think about back in the 1990s, the load boards were going to put brokers out of business,” Turner said. “I think, if anything, every time these entrances of people or technology happen, it just keeps it elevated. The good players always continue to adapt.”
All the panelists agreed that there is room for more than one company in the winner’s circle.
“At the end of the day, there are going to be a lot of winners,” Turner said. “You have start-ups, you have existing companies that are building out platforms and you have third-party platforms building products for existing brokerages.”
One thing Turner thinks will separate those who succeed from the masses is an equal focus on both the customer experience and the carrier experiences. It is difficult to run a successful digital brokerage if the company is neglecting one side of the equation.