Hi, I was quoted in an article at Road Scholar Transport http://roadscholar.com/trucking-industry-digital-transition on B2B procurement of transportation services. I am a firm believer in the shipper/carrier relationship , however as millennials become more dominate in supply chain roles, transport procurement will evolve to a social media platform,YELP type reviews, apps, twitter feeds, etc.
Joe Lombardo, NGNF ( nice guy, no freight)
Once upon a time, when you wanted to do business with a carrier, you would set up an appointment with a sales rep who would then come to your door and sell you on their products/services. If you had any issues, you would call them up and wait for a return call while they resolved it. But that was then.
Now if you need to know the status of a shipment, you can login online and see its exact location instantly. Have a question? You can chat live or send an e-mail right from your laptop. So why not purchase transportation services straight from your computer as well?
In fact, according to Acquity Group’s 2014 State of B2B Procurement study, 94% of business buyers research a company online before making a purchasing decision with the majority of them (31%) “wanting to research and buy online unassisted, with the option to receive phone support if any issues arise” and 10.5% not wanting any sales assistance at all. 1
With this in mind, we posed two questions to our community of transportation experts: Do you foresee a time where the norm will be to point-click and buy freight transportation in an Amazon-like experience and are gone the days of the traditional door-to-door sales reps?
85% of respondents agreed that the trucking industry will morph into an online experience, if not already doing so, and would mark a significant shift in road transportation.
Global Logistics & Transportation Professional David Suh, theorized about the concept. “It is what Amazon and other e-retailers are doing. It just won’t be small parcels. All the stake holders will remain in place; however, the method to which they communicate (system) will be integrated for seamless order processing. When it is completed, I predict upon completion driverless vehicle for freight transport will occur within 10 years. Once the real-time tracking is fully functional, the drivers won’t be needed. What I mean is that satellite GPS is still not reliable enough due to many factors. Developing infrastructure in roads and highways, calculating how external events effect transport conditions such as storm and traffic conditions, contingency protocol of satellite link, just to point out the few are not offering safe environment of driverless trucks, currently. However, once the GPS algorithm is completed, drivers will no longer be required. A truck integrated into the system will be dispatched, arrive at pick up location, back up to dock, depart, provide real-time transit all the way to the delivery point and get a POD. About the time driverless trucks are on the road making deliveries, solutions to serve the “other” category will be completed and integrated.”
One shared theory among respondents was that buying transportation services online would be utilized mostly by smaller companies who may not ship a particular lane often and would rather spot quote a shipment looking for the cheapest rate, while larger businesses will look towards entrusting dedicated carriers with their products.
“The point/click load coverage websites work for smaller shippers and some overflow for larger shippers,” explains David Brown, Director of Business Development at QWExpress. “I do not believe that this would be a strategy taken for major shippers, hoping that someone will book their freight on a daily basis. Both the current and growing driver shortage and the implementation of electronic onboard logs are pulling capacity out of the market. We are seeing our customers instead interested in locking capacity with dedicated contracts, even if those are not the cheapest option. So, if you are shipping 10 truckloads a week, this might be a solution. If you are shipping 100 truckloads a day, however, this does not seem to be a reliable source to ensure your product gets to your customers.”
Robert Frick, CEO at RDF Logistics, added, “Texting, email, insipid automated answering machines and telephone messages will be the bane of the companies that persist in removing the human factor from business practices. How much do you value your company image and credibility? For those companies that “might” ship a couple of times a year, there is probably no need for a logistics function in house. If you have a consistent flow of shipments, I believe that you are better served with personal contact and reliability. If you just want to get the product off of your floor, log onto a board. If you always do what you have always done, you will always get what you have always gotten. Respect is vital in the success of any company. Respect for the Company, Individual and Supplier pay huge dividends.”
And while most respondents can see a time where the transportation industry will be transformed to an online experience for purchasing, not everyone agrees that it would be completely beneficial.
“I see a day when a shipper will have no need to pick up a phone to talk to a carrier, it will be a 100% digital relationship (which is sad),” said Joe Lombardo, President and Founder of Ege Avenue Associates. “More disruption will happen as shippers communicate directly with drivers using apps.”
Frick went on to compare participating in transactional business as a gamble to the shipper. “Playing the spot market to gain immediate relief of freight cost is like sitting on a keg of dynamite and lighting the fuse. It only perpetuates weak carriers/owner operators that are on the road to extinction, along with your company’s future. Carriers need sustainable freight to survive and shippers need sustainable carriers that have the ability to grow with them. Only the short sighted shippers would chase the Golden Ring on the Merry Go Round. Businesses need dependable service to grow and carriers need dependable shippers to sustain growth and replace equipment. They also need to meet their financial commitments and to keep up with the cost of living. If the shippers want to exist tomorrow, they must ensure that they will be able to meet their customers’ needs and exceed their expectations with high quality service.”
Others mentioned difficulty in such a transactional method due to factors such as the age of the driver pool. “A moderate to small portion of the marketplace may migrate to that environment. Particularly very easy to move LTL or truck load freight,” said John Lenzmeier, Rick Management Professional at Arthur J. Gallagher & Co. “However, in my opinion, because of several factors, including a highly fragmented marketplace, a very dynamic freight supply and demand curve and the market forces of an aging driver population, an Amazon point and click solution would be very difficult to envision.”
Lenzmeier goes on to present an example, “Say a load of copper tubing originating in VA is going to a manufacturer in PA. It is palletized, can be hauled in a van or reefer, weighs 40,000 #s, but the functional delivery is within 2 days, because this copper is needed by week’s end to support the manufacturing process. So what if this load stolen en route? What is the downside? A lot! Do you think the enterprising thieves would give it back? Thinking through all the potential costs is painful, but perhaps not as painful as being in this conversation. Let’s consider how this conversation might sound:
(Johnny being the traffic manager who put the load on the internet site / Bob being the President of ABC Copper)
Bob – Hey Johnny – you know that load of tubing for XYZ mfg…we just got a call that the truck did not make it.
Johnny …Alright boss, let me look into it…
2 hours later
Johnny ….Ah, Bob….I got some bad news. I have no idea what happened to the load- can’t find the truck.
Bob…wait, what?…our # 1 client, who buys $10MM a year in copper, is worried that his plant may shut down because you wanted to save $250 on transportation? Really?
Do we have any more of this copper in inventory?
Johnny – yes 3 pallets –
Bob ….OK call an expedited carrier – I don’t care what it costs – get that copper to our customer by midnight!
In some instances the “internet / Amazon type” system might make sense. In others, it does not. To quote Warren Buffet, ‘Price is what you pay, value is what you get.’”
And while a point and click environment might be easy envision, many explain that it is already here. “There are many platforms across different transportation modes chasing this dream right now–Cargo Chief, Keychain Logistics, and Cargomatic, Inc. to name a few,” explains Burke Smith, Managing Director, Transportation & Logistics at Headwaters MB. “The common challenge is the one highlighted here. There has to be enough consistent, service-oriented capacity in the platform and some feedback mechanism to make shippers comfortable. And carriers don’t want to chase price in a capacity-tight environment. The trick is to find a value proposition for the carrier side so they view the exercise as core to strategy and not just in fill.”
With the concept then brought to light, we furthered on asking if the days of the traditional door-to-door sales reps were over.
“The days of a carrier sales rep, who has a specific geography and calls on shippers in that area, will go the way of the dinosaurs,” says Lombardo. “Small shippers will either have to do all their business online or through a carrier’s telesales or national customer service center, the only carrier representative they will ever see is the driver. Large shippers will continue to have dedicated national account managers that call on them. Mid-size customers may see a combination of online and telesales and being called on by an independent carrier sales representative who would represent more than one carrier and be able to offer the midsize shipper a portfolio of transportation providers.”
Lenzmeier puts it well in saying that “Every profession evolves. The sales rep that only understands price and cannot show value beyond that is in for long days. The ones that can leverage technology, understand how their product or service makes the client faster, better, smarter, and can articulate this message successfully will be around for a long time. As Benjamin Franklin states, ‘The bitterness of poor quality remains long after the sweetness of low price is forgotten.’”