Aug 8th, 2018
Digital Freight Matching Alone Can’t Build World-Class Logistics Operations
By: Greg Carter, Chief Technology Officer, GlobalTranz
Uber announced last week that it was shuttering its self-driving truck program, a development that had several industry experts questioning the future of the company’s digital freight brokerage app Uber Freight, which launched in 2017.
The Uber Freight app is modeled after the company’s ride-sharing app as a method to match truck drivers with available freight loads. Uber quickly discovered its simple model of driving people from point A to point B couldn’t be easily applied to the complexities of freight shipping, where nearly every load is unique. Applying technology to logistics management is critical, but the key to digitizing logistics is through TMS (transportation management system)-specific technology, which is developed around the nuances of freight, versus the Uber Freight app, which was developed based on moving people.
While Uber has since announced that Uber Freight is not going anywhere, challenges with its freight app have been chronicled by many business publications. Forbes recently reported that Uber announced a $1.1 billion fourth-quarter loss and showed signs of its ongoing struggles to build a robust carrier network, a critical element of its business model. Amid the losses, Uber Freight also discontinued its parcel package delivery service UberRush.
The Importance of Trusted Carriers
Forbes reported that one of the core problems Uber Freight faces is, “Many shippers and virtually all larger ones don’t want to do business with just any carrier.” At Uber Freight, carriers are required to have an active DOT / MC number, no conditional or unsatisfactory safety rating and proof of insurance. But these are minimal requirements.
Large shippers want to do business with a network of trusted carriers. A trusted carrier will have drivers with sterling safety records, likely more than the legal minimum insurance, and expertise in special areas—like HAZMAT or refrigerated shipping—and can be counted on to deliver reliably. “In short, freight movement is not like the Uber ride-hailing service where most customers are willing to accept a ride from almost any driver. Shippers need to be far choosier,” reports Forbes.
While the idea of managing freight via an app may seem attractive, shipping freight is far from simple. Freight brokering is a complex operation that involves many variables, where even small problems can quickly escalate, and cost shippers lost time and dollars to the bottom-line. It takes more than an app to successfully manage and navigate the complexities of logistics operations.
People, Processes & Technology = World-class Logistics Operations
Companies can build world-class logistics operations from the combination of three critical resources: people, processes and technology:
Partner with a logistics service provider who has a dedicated team tenured in solving complex logistics challenges and dynamic freight market conditions.
Leverage a deep network of the most reliable and trusted carriers capable of moving a broad range of shipments—from a 50 lb. box cross-country to a 500,000-ton transformer overseas.
Use solid procurement and RFP processes that successfully source the best carriers at the best rate, while leveraging volume pricing.
Practice accurate freight booking, which includes understanding how size, weight, commodity and freight class determines the most optimal movement of a load.
Optimize freight and practice modal shifts (ie: LTL to volume shipments) to drive cost savings.
Thoroughly vet carriers to make sure they comply with safety and reliability standards to help mitigate risk.
Establish continuous improvement processes to optimize overall transportation spend, operations, and drive competitive advantage.
Use a transportation management system (TMS) with the following capabilities:
Robust freight procurement to rate, book and dispatch loads for all modes and equipment types.
Automation to reduce manual tasks, errors, and improve competitive and operational advantages.
Real-time visibility into all shipments from all carriers and logistics providers.
Pre-built integration adapters that connect all business systems for seamless data exchange and complete shipment visibility.
Business Intelligence and predictive analytics to manage disruptions and help businesses make data-driven decisions.
The inherent complexities of the logistics industry will continue to evolve, bringing both risk and opportunity to corporate supply chains. An app alone is not enough to build world-class logistics operations. The coalescence of people, processes and technology is the key to effective supply chain and logistics management that will create operational and competitive advantage for a business.