Digital Freight Matching
Making every mile count
Revolutionizing logistics with digital freight matching
What if you could streamline your business, bolster productivity and slash your environmental impact?
Digital technologies are gaining traction in supply-chain logistics, unleashing a wave of efficiencies and unlocking multiple side benefits. In addition to boosting revenue and slashing operational costs, innovations like digital freight matching are reducing emissions, bolstering productivity and creating a more sustainable industry.
Using transport management software to match a vehicle’s capacity to nearby waiting shipments offers great potential, since lorries and trucks keep the global economy moving. In the US alone, they handle more than 70% of all freight tonnage.
Here are some of the key benefits offered by digital freight matching, which uses online and mobile technology to connect shippers who have cargo to drivers and trucking companies looking for loads:
1. Fewer empty trucks
Empty miles cost money. About 20% of the distance driven by US truckers is non-revenue generating, according to a report by the American Transportation Research Institute. Many industry experts say the actual number could be even higher.
By marrying the cargo to the truck as accurately as possible, applications that offer digital freight matching help eliminate these empty miles, boosting profitability while also lowering emissions and reducing the carbon footprint of the supply chain.
2. Better use of space
In the same way that they help to eradicate empty miles, digital freight tools can also make sure cargo space is being used in the most efficient way. Even experienced shippers can struggle to get the most out of the space on offer in each container and get the best return on investment.
Digital freight matching algorithms quickly calculate the optimal way for loads to be carried, helping drivers ensure they have cargo to carry in both directions before they set off – and all but eliminating the wasteful empty “back-haul.”
One company operating in Saudi Arabia offers a template of how this can work. There, 40% of trucks complete the return leg of their journey completely empty, costing the economy around $5 billion every year, according to the digital platform Homoola, which has financial backing from Agility.
“Knowing how big the inefficiencies were in the traditional way of doing things, we could see the enormous potential of a digital solution that made load-carrying more efficient,” Homoola’s co-founder Ziyad Alhomaid says.
3. Less time waiting
Using the technology in this way also cuts out the time drivers spend sitting idle while waiting for cargo. Connected systems facilitate planning that reduces loading, unloading and clearance logjams at ports and warehouses. In addition to a cost benefit, there’s a huge environmental upside, since an idling engine can produce up to twice as many exhaust emissions as an engine in motion. That releases a range of air pollutants including carbon monoxide, nitrogen dioxide, and other particulate matter.
4. More efficient fleets
Using digital freight matching technology allows firms to accurately estimate the numbers of vehicles and drivers required, not only for a given shipment, but also over a longer period. This enables them to right-size their fleets and driver pools, potentially saving significant amounts of money.
5. Less traffic on the roads
Cutting out unnecessary journeys reduces congestion and emissions. Any technology that helps reduce the number of heavy goods vehicles will have an instant environmental impact. In the UK alone, they are estimated to account for around 17% of greenhouse gas emissions from road transport and more than 20% of road transport nitrogen oxide emissions, while making up just 5% of all vehicle miles.
6. Paperless deliveries
Documentation associated with shipping often mounts up. Digital freight matching apps allow this to migrate to the cloud, saving time, money and energy, instantly cutting waste.
“Shipments often come with a lot of paper,” says Homoola’s Alhomaid. “We’re reducing this on the carrier side, as well as for shippers, and working towards a paper-free solution. It saves time, money, energy – and the environment.”
7. More transparent pricing
Technology can also aid price negotiations, letting both sides see a range of different prices, in real time, at the click of a button. Faster, more liquid transactions conducted via an app can be beneficial to both sides.
In 2016, US businesses spent more than $1 billion on logistics, much of which was procured in long-term contracts of more than six months, according to a report by the consultancy firm A. T. Kearney. Signing lengthy commitments is a financial risk for both the shipper and the carrier, whereas a more dynamic market – created by digital freight matching – helps to mitigate these risks because both parties have a better handle on fuel prices, surcharges, tolls, taxes, tariffs, driver’s rates and other costs that they will incur.
Such tools also improve transparency, visibility and comparability of pricing structures, and can be updated in real-time.
8. Stronger safety standards
In the same way that it bolsters pricing transparency, digital freight matching also gives better visibility to the documentation that’s involved in the industry and can help make the safety aspect less opaque. Driver certifications and safety records can be made easily accessible and readable on mobile devices. In time, distributive ledgers could also create instantly shareable records.
At any given time, for example, a shipper can see a truck’s location, have transparency over the associated costs, and gain insights into important points like on-time delivery. Certificates and records are accessible to all who need them, whenever they’re needed.
For Homoola co-founder Asim Alrajhi, this safety aspect goes together with enhancing quality control.
“It’s a fragmented market,” he says. “Things are done on the phone rather than digitally, and often there’s no quality assurance.” While digitalization is still at an early stage, the market in trucking is set to balloon to around $80 billion by 2025, up from around $11 billion currently, according to estimates from market research firm Frost & Sullivan, which also predicts digital freight brokerage will make up the lion’s share of that.
Once such technologies are adopted, they will improve predictability, speed, transparency and sustainability. This will ultimately result in the seamless delivery of any item, anytime, anywhere at a lower economic and environmental cost.