Billions of dollars have poured into last-mile logistics over the past decade, reflecting just how important the final leg of a shipment's journey has become. With e-commerce continuing to grow, that pressure is only increasing.
Yet while the transportation industry keeps upgrading the last leg, the financial contracts that underpin it remain antiquated. Let's explore why the supply chain's current pricing model needs an update.
Static Prices Are No Longer Relevant
The primary way the supply chain operates, especially in trucking, is through annual contracts with static prices. When the market turns volatile because of a crisis or instability, statically priced contracts stop matching reality and create big problems.
Under this rigid system, carriers absorb all of the pricing risk when freight prices spike. At the same time, service levels become unpredictable for shippers, who run the chance that their freight might not get delivered. The result is an unbalanced equation: money comes out of the carrier's pocket, while reliability stays shaky for both parties.
Recent market swings only made this worse. Long-term contracts locked in static prices often lead to load rejection from carriers in a high-demand era. As a result, shippers increasingly turn to "mini-bids," signing contracts several times a year instead of relying on the traditional annual process. Static pricing only works in a highly stable, near-guaranteed market, and the freight network is rarely that predictable anymore.
Broken Touch Points Along the Supply Chain
Logistics is vital to transportation today, but it is exposed to too many risks at every level, from driver shortages to unpredictable freight capacity.
A more flexible, efficient freight-pricing system is needed to steady some of those variables. In the current model, brokers act as contract facilitators, generating dozens of annual contracts that may, but mostly may not, work out. That creates an ambiguous network where the left hand doesn't know what the right hand is doing. By cutting out the middle-man, digital platforms that serve all parties can start to build a long-term answer for supply-chain pricing.
Applications can implement a dynamic pricing model and connect shippers and carriers directly, giving both sides a precise, transparent price and a win-win proposal.
By building a large network of carriers that can bid instantly, demand connects directly to capacity. A useful analogy is how ride-hailing apps pulled every taxi into one network, reducing rates and making booking fast and convenient.
With pricing informed by real-time data, platforms can show what's feasible up to the minute of booking, with little risk of rejection because rates stay accurate.
On-demand freight apps help shippers source trucks when they need them, at a price they're willing to pay. Dynamic pricing keeps a finger on the pulse of the market, giving all parties accurate information. Doft is one of the platforms putting this approach to work.
Digital apps can offer an open marketplace for the last mile of the supply chain. That supports a more up-to-date method of delivery and enables Just-in-Time (JIT) shipping, something the transportation industry needs. With trucks one click away at a fair market price, on-demand freight marketplaces are reshaping the future of trucking.
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