Using Digital Platforms to Connect Demand to Capacity

In today’s tight transportation market, finding carriers to cover loads has become increasingly difficult. Capacity constraints, labor shortages, rising shipping costs and growing shipping volumes are all expected to continue throughout 2022 (and possibly beyond), making traditional approaches to procurement insufficient. Addressing both short-term and long-term capacity needs requires a more modern and strategic approach. Digital freight matching can help overcome these challenges by accessing untapped capacity and connecting carriers with freight.

Capacity continues to be a major concern for shippers and their brokers and logistics providers. With a truck driver shortage of 80,000 (and growing) and shipment volumes continuing to rise, capacity constraints are expected to continue. It’s estimated that demand for peak-season parcel delivery services in the U.S. will exceed capacity by about five million parcels a day. With both a sudden influx of new drivers and available market resources unlikely, shippers and brokers must find more effective ways to source capacity.

Digital freight-matching platforms can help address this need by adding real, sizable capacity to a network and directly connecting carriers and drivers with freight. Through the use of artificial intelligence, machine learning and automation, these platforms act as a marketplace that provides a smart through line for matching need with availability. It’s a faster option to traditional tactics, which tend to take longer and provide less information transparency. And because a digital freight model runs on an open-source platform, it enables brokers to connect with carriers individually, and also partner with other digital service providers to gain access to their networks and market data. This makes for the quick and seamless identification of carrier capacity to cover loads, even in capacity-strapped markets. It also helps break into new markets that lack carrier networks altogether.

Digital freight matching offers real and impactful benefits to address capacity constraints, including:

• An expanded and diversified carrier network. Shippers and brokers can eliminate capacity constraints imposed by national carriers by diversifying the carrier base and expanding their networks to include thousands of smaller regional and independent carriers. With 97% of U.S. carriers owning 20 or fewer trucks, the ability to tap into this pool helps build a larger, more reliable and scalable carrier network.
• Automated load matching. Digital tools streamline the procurement process by eliminating the need for manual searches, data entry and contacting carriers. These platforms quickly find the best match, with instant quoting and booking capabilities that make securing a move more efficient.
• Maximized capacity utilization. Digital freight matching helps carriers improve asset utilization by providing greater visibility into available loads and by enabling them to secure more loads, eliminating empty miles.
• Better visibility. Shippers and brokers gain greater visibility into capacity in specific markets or lanes, along with important carrier information such as available equipment, past histories and other service details. Near-real-time visibility into market conditions, along with open and matched loads, helps shippers and brokers better address supply versus demand and day-to-day pricing fluctuations.

Outlook:

Resource shortages and surging e-commerce volumes are likely to cause capacity constraints and higher freight rates for some time to come. Businesses can’t simply wait for the market to ease up, or for more capacity to be injected into the market. By utilizing digital freight-matching platforms, organizations can address short-term capacity needs while expanding and diversifying carrier networks to better position themselves moving forward — no matter the market conditions.

Brian Work is chief technology officer of Transportation Insight.