Freight Brokers Won't Yield to Startups Without a Fight

When it comes to on-demand freight, C.H. Robinson Worldwide is the giant of the industry — and it isn't running from anyone. Generally considered the country's largest freight broker, Robinson has been updating and expanding its freight-hauling and logistics technology on multiple fronts to stay ahead of competitors, new and old.

In a recent stretch, the Minnesota company added or updated mobile apps for trucking carriers and drivers. It also began testing a predictive-analytics service with a major customer to track loads more precisely in real time and anticipate severe weather that could disrupt deliveries.

Robinson's actions are indicative of steps traditional freight brokers are taking to counter competition from newer load-matching platforms. In addition to updating technology, big brokers such as XPO Logistics have acquired companies to break into new businesses and new geographic markets. Other industry veterans have launched companies to beat on-demand freight startups at their own game.

Big, but Still Fragmented

Chad Lindbloom, Robinson's chief information officer, downplayed concerns about newcomers. The industry is so fragmented that even the biggest player holds only a small share of the U.S. freight brokerage business.

"Yes, they are competition. But there are tens of thousands of competitors out there," Lindbloom said. "What we do as innovation isn't in response to them."

Because Robinson's broker services are part of an integrated technology platform covering all modes of transportation globally, the company believes it can build new tools as fast as a startup. Its mobile app, Lindbloom noted, uses the same data that supports manual transactions in its system — "another way to deliver the same functions."

More Apps, Better Tracking, Predictive Services

Robinson joined the ranks of on-demand freight-matching services with mobile apps for truckers, extending its Navisphere global freight-brokerage platform. The driver app is a pared-down version of a carrier app the company first launched years earlier.

Working with a technology partner, Robinson tested machine learning and predictive analytics to track truckload locations in real time. Shippers can zoom in on a map to see the progress of goods down to the SKU level, and the system predicts when loads might be late because of bad weather. Computer models analyze how a shipper re-routed trucks around bad weather in the past and proactively suggest route changes to avoid delays.

Other brokerage veterans took a different approach. Noam Frankel, a long-time insider, started a service called FreightFriend that lets brokers, carriers, and shippers create their own private logistics networks. Although similar to load-matching services, parties can't use it unless an existing business partner invites them. "We took the tech of a public load board and added friendship on top of it," Frankel said.

Brokers Continue to Diversify

Though Robinson's truck brokerage division accounts for roughly three-quarters of its revenue, the company has been acquiring businesses to diversify, including a freight-forwarding operation that gave it a stronger foothold in the Pacific market. XPO Logistics has also made numerous acquisitions, and large logistics businesses such as UPS have bought freight brokers of their own.

Industry analysts expect third-party logistics companies to keep snapping up freight brokers, including some of the newer freight-matching platforms. The current state of the industry, one observer noted, is reminiscent of the late 1990s tech boom — full of startups offering similar products while bigger companies went on a buying spree looking for a competitive edge. "There will be a shakeout," she said.

Source: Trucks.com