As digital apps proliferate, are load boards losing their appeal?
After a foray into Europe, Uber Freight is now out to conquer the Canadian market. The move heralds disruption for the freight matching scene, but more is on the horizon
Joel MacKay, president of Mactrans Logistics, reckons that the entry of the digital freight matching service will have an impact on the Canadian scene. “Uber is a big deal,” he says. “Uber is an intermediary. They’re not just matching up loads; they’re managing the entire process.”
His company should be able to cope fairly well with the change, he thinks. “Am I worried? If you’re merely a freight brokerage, just providing transactional service where price is the factor, it is an issue. We do more than that. We do a lot of integrated final mile and LTL business,” he comments.
Overall the advance of the likes of Uber and Amazon will push the industry forward by forcing everybody to spend more on technology, he adds.
“We invest a significant amount on technology,” he says. “What’s available now is reasonably priced.”
Matthew Kane, founder and CEO of Riteload, thinks that the change ushered in by the likes of Uber does not go far enough.
“The likes of Uber Freight and Convoy are still brokers,” he comments. “C.H. Robinson and other brokers now go to technology, because they realize that technology is going to make the process and easier, but they’re still inserting themselves in it. But if the technology is so good, why not connect the shipper and the trucker directly? Why not replace the broker in the middle?” he says.
He argues that it is time for a fundamental change.
“The freight broker model is done. It’s over. Technology is going to replace it,” he declares.
His own outfit is trying to do just that. Riteload’s platform is for shippers and truckers. They sign up at no cost to post or look for loads and pay a flat fee if they connect and contract a load through the platform.
According to Kane, this is a win-win scenario that cuts out the fees a broker would pocket. The trucker ends up with more money, and the shipper pays less money, he argues.
According to him, Uber and Convoy cannot match Riteload’s low pricing, being burdened with investors who demand a higher return.
According to him, at this point his outfit has over 20,000 carriers in the system. It vet truckers and offers geotracking functionality. Payment is fast, he claims. Carriers can send proof of delivery over the phone before leaving the consignee’s premises, triggering a message to the shipper to authorize payment.
For Kane, this is just the start. He intends to leverage the number of truckers that use Riteload to get discounts on fuel, repairs, tires and towing. “We’re looking to build a one-stop shop,” he says.
Next year he intends to formalize a partnership with a “fairly significantly sized insurance company” to offer truckers savings on their insurance costs. “We’ve been speaking with an insurance carrier in Canada,” he adds.
“We will move into Canada, but I’m not putting a timeframe on it. I want to build a solid case in the U.S. first,” he says.
What does his scenario mean for load boards? Are their days numbered, or do they have to change?
“The likes of Truckstop will have to adjust. They’re in a quandary. Their bread and butter are the brokers. If they go towards the Riteload model, brokers will bail out on them,” Kane reflects.
Commercial Capital, which offers invoice factoring besides supplier financing and purchase order financing, sees load boards as tools of limited appeal. In a blog on its website it characterizes them as good for new entrants or truckers with few shipper contacts. On the positive side, they are available 24/7, are usually free or inexpensive for truckers, and many have additional features like credit checks. However, competition of participants drives down rates, which are further reduced by the margins claimed by brokers, so they are not very profitable for owner-operators, according to Commercial Capital. The firm does not find them good for long-term strategic use.
Mactrans uses load boards mostly for ad hoc, often last minute, loads. For regular business it talks with clients to develop carrier programmes, MacKay says.
Less than 10 per cent of the freight that Mactrans manages is posted on load boards, but “for that portion it is an important tool,” he remarks. “It’s a way to find backhaul. It is important.”
Moreover, load boards have added features to make themselves more useful. In the U.S. market 123Loadbaord introduced a mobile app in November to submit invoices for faster access to money from factoring companies. In September it had launched a free profit calculator for truckers to compute linehaul revenue, fees and estimated fuel costs and establish within seconds if a load is profitable.
Loadlink’s Rate Index is helpful when Mactrans is working on larger bids, and other elements also provide useful information, MacKay says. He would like load boards to introduce more features for brokers.
These functions are helpful tools but should not replace the user’s work entirely. Load boards usually vet their carriers, but Mactrans has its own process to check out truckers it finds online. “At the end of the day it’s our responsibility,” MacKay says.