The Wisdom of the Crowd (Sourcing) Doesn’t Apply to Commercial Shipping

More than a year ago, the Supply Chain Collaborator blog examined the trend toward crowd sourcing and wondered aloud whether an “Uber for commercial shipping” was imminent. In that post which you can re-read here, we took the position that it was highly unlikely to occur given the myriad impediments to effectively developing such a solution. Sixteen months later, a virtual lifetime in the technology realm, the crowd sourcing economy shows no signs of slowing with numerous solutions emerging across a host of industries. Yet, as an op-ed in the Wall Street Journal concludes, we are still nowhere near developing a killer app for crowd sourced commercial shipping. Why?

The WSJ piece, written by trucking brokerage president Jeffrey Tucker, highlights one of the main reasons why this technological disruption has yet to be successfully applied to commercial shipping. Tucker rightly notes that while Uber and its imitators succeed in connecting supply with demand (passengers with drivers), commercial shipping does not involve the same 1-to-1 relationship. If it were as easy as connecting a shipper to a carrier, the Uber model might well succeed. However, very few shippers involve themselves in the freight business, preferring instead to source capacity via intermediaries (brokers). On the other side of the equation, trucking carriers aren’t sitting around waiting to connect to random loads that may be offered via some nifty new phone app. With capacity at a premium, carriers today are very strategic in what business they’ll accept.

Tucker nails this important distinction in this passage, “Freight isn’t people. People come in a predictable size, and fit in most car, train, bus or plane seats. But each shipper is unique. They work different hours, have varying requirements for things such as temperature and security, operate under varying insurance regimes and carry different liability demands. Most want drivers and points of contact with high familiarity with their needs. Carriers, too, have different specialties, including equipment, regional coverage and work rules.”

Consider the TV program Shipping Wars as an illustration.  The online platform used by shippers to source carriers for their shipments – items of limitless variability in terms of size and countless other constraints – is only effective at sourcing carriers who almost always have little to no experience in hauling the freight they accept.  They often lack the correct equipment needed to effectively haul the cargo.  Clearly, sourcing for price alone leaves much to be desired and would not be acceptable for large volume shippers.

Noting that brokers and large volume shippers already leverage technologies like TMS to manage complex data sets and fast-moving information flows, Tucker does see a future where the truck-based onboard electronic logging devices (use of which has only recently been mandated by law) may be leveraged to speed transportation processes and unlock additional efficiency. But the outlook for such advances is muddy at best.

This is not to say that contemporary advances in computing aren’t making their way into the commercial shipping industry. The advent of cloud based TMS has opened up many avenues to improved efficiency, even for SMBs (small/mid-sized businesses) who were formerly priced out of the market for such solutions. Leveraging its TMS Core solution for example, UltraShipTMS produces a “capacity finder” basically enabling mid-sized shippers to create and manage what essentially amounts to their own, proprietary load board populated with carriers to which the shipper has an existing relationship. The automation of the tendering processes enabled by the new solution permits a shipper to shop for capacity on the fly, without always resorting to pricey, spot-market rates.

What’s clear is that technology solutions are evolving for commercial shipping users, but not in parallel with the more retail-driven nature of the crowd sourcing economy. Strategic sourcing may be possible for shippers and the carriers that serve them. It just isn’t going to look like Uber.

Leave a Reply

Your email address will not be published. Required fields are marked *