– Starting with less than truckload (LTL) and rail freight, North America’s online freight marketplace is rapidly expanding its services and coverage
The Freight Transportation Industry
The US and Canadian trucking industries generate about $750 to $800 billion in revenue. When you add in rail volumes, the North American surface transportation industry represents trillions of dollars in revenue. The industry is highly fragmented; there are 750,000 licensed trucking companies in the US, according to the US Department of Transport, of which 90,000 have more than 20 trucks.
Shippers that move freight across North America have always faced the challenge of finding a set of trucking and rail service providers with the precise range of services, geographic coverage and rates that meet their needs. Since no single asset-based transportation provider can meet the needs of all shippers, the trucking industry has long relied on the thousands of third-party brokers, essentially travel agents for the freight transportation industry, who connect shippers and carriers. Over the past few decades, the industry has evolved from phone and fax machine communication to internet, smartphone technology and sophisticated data management.
The Origins of Freightera
Eric Beckwitt, Founder and CEO of Freightera recognized that shippers and carriers “are experiencing a lot of pain due to inefficiencies and a lack of a simplified integrated system that allows shippers to get the best rate and allow carriers to provide their services directly to customers.” Mr. Beckwitt brings a unique perspective to the freight industry.
“I had to leave the home that I built for my family because my child was in and out of hospital with asthma and chronic pneumonia due to the polluted air in Northern California where we lived. My family had to live through the full consequences of poor air quality and climate change. I came into the digital freight space with a background in GIS, environmental planning, online business automation, and an understanding of the impacts that trucking, air freight and global shipping have on climate change. What motivates me is to create a more economical, efficient and clean transportation system for the future.”
The Freightera Business Model
Investopedia defines Disruptive Technologies as “those that significantly alter the way businesses or entire industries operate. Often times, these technologies force companies to alter the way they approach their business, or risk losing market share or becoming irrelevant.” Clayton Christensen popularized the idea of disruptive technologies in the book “The Innovator’s Dilemma” published in 1997. Disruption is the process whereby a small company with few resources successfully challenges a larger established incumbent business or invents entirely new markets.
Over the past year, freight brokers took on added importance since they were able to leverage the assets of a range of modal options and service providers. During the capacity crunch of 2018, many shippers were not able to obtain the number of trucks they needed from their core carriers.
Freightera, a small but growing Vancouver-based company, is creating this type of disruption in the freight brokerage industry. This four-year-old startup, with revenue growing about 250% a year, created a proprietary cloud-based platform that contains the tariffs and schedules of hundreds of carriers. That data can be updated and uploaded in real time and configured for each carrier. The freight transport booking platform gives customers the power, for the first time, to control their own shipping costs and instantly see the highly variable pricing in the market.
“Just as Expedia provides multiple airline or hotel options in the personal travel industry, Freightera offers instant all-inclusive freight quotes, from carriers of all sizes, 24/7. Shippers can compare carriers by transit time and price on their phone or computers and make informed decisions,” stated Zhenya Beck, Freightera Co-Founder. Over 9,000 manufacturers, distributors, wholesalers and retailers in the US and Canada use Freightera 24/7, for online access to billions of all-inclusive freight rates and instant freight booking. The less than a truckload (LTL) sector of the business is the most highly automated by Freightera. The company also offers door-to-door FTL and LTL by rail service, container freight, volume pricing, temperature control, dry van and flat-bed truckload service.
Filling Railroads’ Empty Capacity
Mr. Beckwitt noted that “we have expanded the number of class 1 railroads with pricing in the system, so we now have automated pricing for all but one of them. We think we offer the best full truckload by rail service coverage online. We are in discussions with them to help fill their empty capacity.
Freightera is expanding its range of services and pricing options with its rail providers. The railroads see a big opportunity in working with a company that can attract truckers to use the digital marketplace to move their loads via rail. In February we will be launching an expedited rail service, with one of the partners, that will be faster than over-the-road service.” Manufacturers and retailers with truckload shipments can compare truck and rail service providers, transit times and rates to optimize their freight expenditures.
How It Works
When a shipper signs up, they can perform an instant online search (https://www.freightera.com/en/freight-shippers/quote?lane_type=LTL) using the Freightera website for multiple, competitive freight rates and space availability for the specific origin, destination, type of required equipment, timeline and other conditions that suit their requirements. The company’s platform finds several matches, displays them as quotes, and if a quote is booked, secures the transaction with the carrier. Although carriers and shippers are both required to “sign up” to use Freightera’s marketplace, neither pays a membership or subscription fee. Registration is free.
Freightera’s services include transaction support online, shipping history, documentation, tracking, and customer support. As part of the service, it currently provides the shipper an automated online order, payment documents and a freight waybill (Bill of Lading) and generates a purchase order (PO) for the carrier. This is a significant productivity benefit for both shipper and carrier, and a competitive advantage.
Freightera’s Green Freight Marketplace
Freightera, in cooperation with SmartWay and Natural Resources Canada, has created the North American Lower Emission Freight Marketplace (https://www.freightera.com/en/green-freight). “In Freightera’s Lower Emission Marketplace, SmartWay-certified carriers and railways consistently get over 80 percent of the loads. Depending on the distance hauled, the rail component, and the emissions reduction achieved by the SmartWay carrier, each of these loads can achieve up to 60 percent reduction in CO2 emissions today,” stated Freightera Founder Eric Beckwitt.
“Remarkably, shippers achieve these results by pursuing a lowest possible freight transport cost strategy, because the most efficient carriers from an emissions perspective are also frequently the most affordable. Fuel efficiency simply translates into cost-efficiency. It’s a win-win.”
With a computerized routing/booking system, often the route will include rail as the preferred option. This option may be cheaper and greener; rail shipping offers 66-80% less carbon dioxide emissions.
“The key to immediate emissions reduction is offering rates that are both lower cost than available elsewhere and lower emission,” stated Mr. Beckwitt. “We see a consistent message from the largest multi-nationals shipping freight. They are aware of the urgent need to reduce emissions, but none of them will do so unless the lower emission option costs the same or less. We are receiving a good response to this service from the large multinationals and our investors.”
Moving from the “Expedia for Freight” to the “Amazon of the Freight Industry”
The Brokered Freight Market is estimated to reach $930 billion globally in 2025. Only 0.2 percent of freight activity is going through digital freight platforms. The rest is on proprietary or manual systems. By 2025, this slice is projected to increase to 3.7 percent or a $23 billion market.
Freightera is on a mission to automate and integrate the global transportation industry. It has started moving some air and ocean freight and these two sectors are in their developmental stages. Shippers and carriers are signing up on the Freightera platform from other countries.
Freightera is one of the only companies that has created a fixed cost model with data directly from carriers. It has found a way to enter carriers’ rates from multiple modes in their data management system so shippers can compare rates from carriers of all sizes and transport modes in one place.
Mr. Beckwitt advised that “we are thinking big picture as to where the industry needs be in 20 to 30 years from an automation, environment and social perspective. We are thinking about a fully integrated global marketplace.”
Back in 1997, Amazon had a plan to go well beyond books and integrate other products into its online distribution system. Freightera plans to emulate the Amazon approach as it extends beyond North American surface transportation to create a model for a global freight network.
The Freightera team is very proud of its vision of creating a fully integrated global logistics system that is automated, efficient, 24/7, low emission, that produces multiple fixed cost quotes, with all required shipping documents. The company expects to have its core international system in place in 3 to 5 years that will include air, ocean, and surface transportation. Its growth is dependent on the speed of funding, development and hiring quality people.
The market is recognizing Freightera’s achievements and its flight plan. Frost & Sullivan has just featured Freightera as one of the Key Automated On-Demand Brokerage Solutions along with Convoy and Uber Freight (http://www.frost.com/sublib/display-report.do?id=K252-01-00-00-00) and nominated the company for a Visionary Innovation Leadership Award in the Digital Freight Brokerage Industry. Mr. Beckwitt concluded our discussion by stating that Freightera has “the audacity to make its vision a reality.” Keep an eye on this company in the years ahead.
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