Technology Helps Brokers Expand Market Share, Improve Carriers’ Efficiency, Executives Say

This story appears in the April 7 print edition of Transport Topics.

Freight brokers and forwarders are using information technology to streamline their operations and expand their share of the freight transportation market. In the process, they are helping freight carriers to be more efficient and shippers to save money on transportation expenses.

When Jean Brillant decided to expand his Boston-area moving business, Brilliant Move, to include international shipping, he hooked up with

1-800shipping.com, a Florida-based company that operates as a freight forwarder.

Brillant said moving large shipments, especially across national borders, can be a lengthy and complex process. “A freight forwarder allows you to focus on other activities while knowing that your possessions or products are moving efficiently toward their intended destinations,” he said.

Tom Jacobs, the owner of 1-800shipping.com, said he started the business a year ago after working for other forwarders for about five years. He operates a “paperless” company and uses the Internet,

e-mail and social networking to serve customers and deal with transportation providers.

At C.H. Robinson Worldwide, the nation’s largest freight brokerage firm, executives have invested millions of dollars in recent years to create the company’s own technology platform, called Navisphere, that allows customers anywhere in the world to communicate with every party in their supply chain. The company also set up a dedicated website, CHRWTrucks, for freight carriers to find loads and access other services, such as freight payment and fuel discounts.

Revenue from transportation management services at C.H. Robinson is growing at nearly twice the rate of traditional freight brokerage revenue, reflecting increased demand for outsourcing of transportation and logistics services.

Bob Biesterfeld, vice president of North American truckload at C.H. Robinson, said in an e-mail that the company’s “information systems are essential to efficiently communicate, service our customers and contracted carriers, and manage our business.”

He added, “C.H. Robinson annually spends approximately $100 million on IT, with much of that investment dedicated to innovative new solutions to support our client’s needs.” Since C.H. Robinson’s technology is built in-house, it can be customized to meet customer specific needs.

Steve Briggs, vice president of information technology for ICAT Logistics in Elkridge, Md., said his company recently introduced a software program that uses the Web to tie together disparate systems of agents working in different countries.

“We want to be able to transact business with little or no manual labor on our part,” Briggs said.

Echo Global Logistics in Chicago uses technology to expand the boundaries of freight brokerage and reset the expectations of shippers and carriers.

CEO Doug Waggoner said the company is targeting small and midsize shippers to provide transportation management capabilities.

“They don’t have transportation management systems,” Waggoner said. “We can combine that with our sourcing capabilities and be able to offer outsourced transportation solutions. We can be multimodal. We can integrate with any enterprise resource planning system. We save money, improve execution and offer a better overall product.”

In some cases, Echo licenses its technology to shippers who use it to execute their own transportation networks.

Waggoner, who began his career with less-than-truckload carrier Yellow Transportation in 1986, joined Echo after initially setting out to create a program to help shippers track shipments, a kind of “poor man’s GPS,” he said in an interview with Transport Topics.

The founders of Echo — Eric Lefkofsky, Richard Heise Jr. and Bradley Keywell — had tasted success before in using technology to make improvements in transportation and logistics activities. Lefkofsky and Heise had started InnerWorkings Inc., which used technology to create a competitive bid process to purchase and deliver printed products. In 2008, Lefkofsky and Keywell helped found the Chicago-based daily deal website Groupon Inc.

“I saw that we had the same vision. So I joined them,” Waggoner said.

Spending on third-party logistics was estimated to be $148 billion in 2013, based on estimates by Armstrong & Associates, a consulting firm in Stoughton, Wis., and the market is growing two to three times faster than the overall economy, Waggoner said.

Technology is creating many opportunities for new services.

One example is Freightos, a company launched in 2011 to provide online freight quotes by domestic and international freight forwarders. Founder Zvi Schreiber started the business after seeing how long it took to get price quotes for products he was shipping for other companies he owned.

“We called 12 forwarders and asked for quotes for a standard China-to-U.S. lane, and we got only one and that came after three days,” Schreiber said. “It was quite amazing.”

International shipments can be complex because they involve multiple modes of transportation, each with their own methods and language. But with the technology available, Schreiber said, there is no excuse for not providing immediate price quotes online.

“Freight is the backbone of the global economy, but its technology has not scaled with the industry,” said Glen Schwaber of Israel Cleantech Ventures, one of three firms that recently invested $4.6 million to help Freightos expand its automated quoting system globally.

Post.Bid.Ship, another tech startup based in Scottsdale, Ariz., has created an online platform for selling space on trucks in real time. The company raised $2.5 million from the Arizona Technology Investor Forum, Desert Angels and Point B Capital Investments. Herb Schmidt, the former president of Con-way Truckload, recently joined the company’s board of directors.

Joel Clum, executive vice president at CarrierDirect, a Chicago-based research firm, said future tech startups will take the form of “marketplaces” or “exchanges” that efficiently pair shippers with carriers.

“Companies who only provide rates to shippers will be replaced by these tech companies,” Clum said.