On-Demand Freight Model Slow to Catch On

Freight Model

In 2016, a small number of companies set out to disrupt the logistics industry by creating on-demand platforms for freight forwarding. The idea was to create a logistics version of other on-demand platforms like Uber and Airbnb. Although the freight forwarding platforms have enjoyed some measure of success, it has been limited.

What some industry experts assumed would completely and quickly disrupt freight forwarding does not seem to have as much appeal as originally thought. There could be any number of reasons for this, but the fact remains that on-demand freight forwarding has a long way to go before it reaches maturity.

A Certain Level of Ignorance

A June 6 (2017) article published by Fleet Owner suggests a couple of reasons for the slow adoption of on-demand logistics. First among them is a certain level of ignorance that exists within the trucking industry. In other words, truckers do not necessarily understand how on-demand freight forwarding can benefit them.

Independent contractors who spend the first part of everyday searching for loads are used to doing things a certain way; it never occurs to them that an on-demand electronic platform could be a better way. The result is that truckers tend to ignore the new platforms. In their minds, the current system is not broken so there’s no need to fix it.

A Lack of Genuine Need

Another possible cause is a lack of genuine need. Consider the fact that there is a long list of major carriers, like Utah-based C.R. England for example, that don’t need to depend on finding daily loads to keep their trucks moving. They have long-standing contracts with regular customers that provide more than enough business.

Likewise, even smaller trucking companies operating regionally or locally may already have enough freight in place that they do not have to rely on finding daily loads. Common sense seems to dictate that the only ones searching for daily loads are owner-operators not affiliated with any specific carriers. Are there enough of them to be able to successfully monetize an on-demand platform?

A Fear of Technology

For some reason, the trucking industry seems to have a fear of technology. Just as an example, there was quite a bit of adverse reaction to the government announcement a few years back that electronic logging by truckers would eventually be mandatory. Electronic logging eliminates the need for paper logs, makes it harder to fake log entries, and acts as a strong motivator for obeying driver’s hours rules. The trucking industry was, and still is, resistant to electronic logging.

Likewise, it could be that both owner-operators and smaller trucking companies are not embracing on-demand platforms because they don’t trust the technology. If that’s the case, widespread adoption of the on-demand model is not likely to grow until software designers prove they can make reliable platforms.

Owner-operators are especially susceptible to fear given the fact that they are not making money when their wheels aren’t turning. They may be reluctant to use an on-demand platform out of fear that it will not be reliable enough to meet their needs. It’s going to take some convincing to change their minds.

Where We Go from Here

It is clear that there is room for technological disruption within the logistics and trucking sectors. It’s also clear that on-demand freight forwarding is not catching on as quickly as some had hoped. So where do we go from here? Carriers will keep sending their trucks out, and drivers will keep driving. In the meantime, the technology world will have to do a better job of convincing truckers that on-demand freight forwarding is the future.