The logistics industry is involved in the transfer of goods from one place to another using any of the three mediums: sea, air, and land-based transport. This article is specific to land-based logistics system. With the growth of several technological developments such as big data, internet of things, augmented reality, autonomous delivery and digital freight management, the future of the logistics industry looks bright.
The quest for profit has led the truck operators to buy more trucks. This still remains the primary objective for land-based transportation businesses. At present, the trucking companies face two major challenges, namely proper utilization and empty runs. In the U.S. and Europe, approximately 1 in 4 trucks runs empty and if the truck is not empty, its utilization rate is rather low.
In order to increase efficiency, it is a must for trucking companies to embrace digitization. This will further enable the data flow in real time, increase the transparency across the value chain, and further help in making efficient decisions.
The land-based logistics industry is highly fragmented, with the total earning of the top five players estimated to be less than 20%. The integral network is formed by the brokerage firm for the proper utilization of current assets. The main value proposition for the brokerage firm is to connect the two individuals or companies in the ecosystem; one who wants to ship its product and the others who help ship the products to the destination. At present, the brokerage firm takes advantage of the opaqueness and demands a higher commission. The Internet will help create a marketplace for the shippers to identify the exact match for their load carrying capacity.
The three factors that act as the drivers for the on-demand freight solutions are advancements in the connectivity technologies, penetration of high-performance smartphones, and success of Uber. Even though the matching solution is not always necessary to be mobile-based, the mobile-centric approach is very easy to use and is a feasible option in today’s scenario. This provides data transparency and allows shippers to ship their products at an affordable cost. All the processes such as insurance, agreement, load/capacity matching, track and trace, and price negotiations can be performed with the help of a mobile platform. These advantages can be achieved with full transparency in the ecosystem.
In the past four to five years, a lot of startup activities have been noticed in both the U.S. and Europe. Every company opts for a slightly different business model and has its own unique value proposition. The companies have diverse growth plans and are attracting a lot of investments from investors. A few companies operating in this business are Quicargo, Loadsmart, Transfix, TG Matrix, Chronotruck, and others. TG Matrix matches the carrier with the shipper with an interesting algorithm. In the matching process, the company also takes into account the total carbon emission by the carrier. The company called Freightos has also grown significantly. The startups and the traditional firms are also not lagging behind and are trying to bring in innovative solutions to the market.
The mobile freight management business is here to stay and has a huge growth potential. The complications in compliance will be the major challenge faced by the industry. In 2017, the digital brokerage firms has witnessed a total investment of $1 Billion. The same trend is witnessed again in 2018, with few companies heavily investing in the businesses. In April 2018, Google, Softbank, and others have invested $1.9 Billion in Manbang Group, China. Several funding rounds have been witnessed by the industry in the recent years and the trend is expected to continue in the next few years.