In the last decade, an increasing number of businesses traditionally rooted in the brick-and-mortar world have seen upstart competition from the digital realm. Uber and other ridesharing apps have displaced taxi services in a number of markets, GrubHub and Door Dash are changing the way restaurants and consumers think about food delivery, and shopping apps have gone a long way to replacing physical retailers and classified ads alike. It should come as little surprise, then, that app-based services are making inroads in the world of freight brokerage.
What is a Digital Freight Broker?
Digital freight brokers conduct their business through mobile apps that connect shippers directly to truckers, much like ridesharing apps connect passengers directly to drivers. Digital brokerage apps often use predictive AI or advanced machine learning capabilities to increase efficiency by forecasting supply and demand needs across the entire chain. That theoretically translates to fewer empty miles for drivers and a significantly quicker, more responsive cycle for shippers.
What are the Benefits and Drawbacks?
The benefits of digital brokerage are relatively straightforward but have the potential for massive impact in the industry. Digital freight brokers, as hinted above, effectively cut out the traditional middleman between shippers and truckers—freight brokerage companies. The nature of the apps means that matching a driver to a load is often more a matter of hours than days, with reduced overhead to sweeten the deal. Drivers benefit from greater control over their time and destinations. And the increasing accuracy and dependability of the AIs that often drive digital freight brokerage means everyone benefits from fewer empty miles.
The drawbacks of digital brokerage, though, may still make it a less-than-ideal option for shippers and drivers with specific needs or specialties. One of the roles a traditional broker plays is logistical; if a driver is encountering problems moving a time-sensitive load like a refrigerated trailer, the traditional freight broker helps them work through that issue to deliver the cargo on time. Digital brokers that rely on AIs have less of that flexibility on the fly. In fact, a not-insignificant number of digital brokers only work with dry flatbeds for that very reason. Many also only book drivers for full loads, which can restrict the access that smaller shippers have to digital brokerage and, for them, more-or-less defeat the point.
Final Thoughts
Digital brokerage is not likely to go away now that it’s become more firmly rooted in the supply chain. While traditional brokers will probably always be in demand, the convenience and financial benefits of digital brokerage are difficult to ignore. Planning for long-term success, now more than ever, means paying attention to the credit scores of both your company and your partners. Let TransCredit help. Contact us today.