How a digital freight network delivers Enterprise-level freight shipping services to small businesses
Shippers • Published on July 10, 2020
Many shippers have heard the term digital freight network (DFN) thrown around over the past few months. DFNs are often associated with automation, visibility and efficiency, but what exactly does all of this mean for small businesses? Here are four ways that a DFN is specifically set up to help small shippers lower costs and get exceptional freight shipping services through speedy coverage, increased efficiency, and higher service levels.
1. Speed coverage with automated freight matching
We often hear small shippers complain about poor experiences with brokers. When you look at a brokers business model, it’s clear as to why. First off, the success of a traditional brokerage is built around capturing the highest margin on every single load with brokers manually identifying available trucks. This takes a lot of time and small shippers are often deprioritized when the market is tight or the broker is busy finding coverage for high-volume shippers.
Convoy automates the matching of trucks to shipments, which drastically reduces the time it takes to find the most cost and time-efficient truck for every load. This means that even the smallest shippers get access to speedy coverage and the assurance that all shipments will be serviced on time.
2. Get the best carrier moving your freight
A digital freight network democratizes access to freight, ensuring that all loads are available to tens of thousands of carriers simultaneously, so the best driver is selected to run your freight.
There are about 3 million trucks and 1 million carriers in the US. To keep their trucks full, these carriers maintain relationships with multiple brokers attempting to get visibility into more loads. No matter how hard they try, most carriers see only a fraction of all available freight at any given time. Traditional brokerage reps have their own network and carrier relationships, narrowing down their options to a fragmented group. When you tender a shipment to a broker, your load is only being offered to a small subset of the carriers in that broker’s total network. In contrast, Convoy gives small shippers unrestricted access to our entire pool of vetted carriers for every shipment.
3. Higher service levels due to network effects
As the Convoy digital freight network grows, it creates more efficiency that directly benefits small shippers. When new shippers join the network, drivers have more options to get the lanes they want to run and the freight they want to carry, which we’ve found translates to higher service levels. When large shippers join Convoy’s network, small shippers also get the advantage of these benefits. With more capacity, trucks are more efficiently matched, keeping them full and earning. Because carriers can earn more in a given timeframe, the rate they are willing to accept for each individual load is often a little lower, which in turn lowers the price we can offer to our shippers.
The results are clear: high volume on a lane increases service levels and improves buying power. By pooling all of this volume into Convoy’s digital freight network, all of our shippers get to reap these benefits, including small shippers who often don’t have the volume to unlock these efficiencies.
4. Lower the total cost to ship freight
Traditional brokers often look at their margin opportunities on a shipment by shipment basis, focusing on incremental profit, not efficiency. Smaller shippers often get the short end of the stick with a traditional broker model because they may not have contract pricing in place and they lack the leverage to demand lower prices. A digital freight network looks at the bigger picture, taking into account all volume and then applying economies of scale to reduce costs over time for everyone involved.
As Convoy grows volume on top lanes, we get more carriers on the app and are able to increase the automated matching and pricing of trucks. With more carriers, we get a fully connected view of what trucks are available which means we can source capacity below market rate – for every shipper.
If you have quoted freight lanes before and the prices seemed high, it’s because we haven’t reached this volume density yet. A digital freight network’s pricing adapts to changes in the market. No more crystal ball pricing on Christmas tree season or produce. When the market swings, we adapt.
Convoy Shipper Platform is now part of Convoy’s integrated online platform for shippers. For more information, click here.