Empty mileage causes significant damage to the freight industry. It adds unstableness to the trucker’s job, increases accident risk on the road, and represents a serious threat to the environment. American trucks drive 50 billion empty miles a year, which is more than a quarter of their total mileage. Similar numbers can be applied to Europe, Australia, and other parts of the world.
Such ineffectiveness causes massive losses: the unused freight capacity costs around €100 billion a year in Western Europe, while the traffic situation in Australia is estimated to cost $30 billion in 2030.
Wasted time and labour, along with the increased carbon emissions and the traffic congestion situation happens because the freight industry lacks flexibility and needs tools to connect shippers with truckers on their way back from a mission. An effective truck logistic app can be such a tool.
Trips with empty trucks, called deadheads, are the most significant industry problem. However, there are many other issues which can be solved with a mobile application and which have already been brought into focus by startups.
First of all, shipping is performed with the involvement of middlemen – freight forwarders and brokers. It’s they who arrange load requests and set the price. Then, there’s the massive problem of managing shipping – existing systems are quite obsolete and begging to be automated.
Let’s take a closer look at the premises and consequences of these problems.
Traditionally, the industry is segmented into three parts: shippers, brokers, and carriers. The middle part, brokers, is even more complex as it’s sometimes divided into freight forwarders and customs brokers. They both act like intermediaries, but the former can also handle documentation and assemble smaller shipments or break larger ones.
All in all, it’s just too complicated – shippers spend extra money on booking fees, drivers need to negotiate pricing all the time, and the rates aren’t transparent. There could be hidden costs related to insurance, correct packaging, temperature control, and so on. Things can get even worse, as it may take up to 60 days for drivers to get paid for the job.
Transport truck apps can be a time- and money-saving solution here. They act like intermediaries themselves, but digital freight brokers can offer centralised and transparent pricing with instant and direct payments. While traditional brokers take around 20 per cent for their services, digital ones can reduce this amount to just 5 to 10 per cent.
There is still no perfect pricing engine, but companies put lots of efforts into creating one. When the rate is market-based and the process of exchanging legal documents is totally automated, it makes the logistics more effective, as both carriers and shippers have less to worry about.
While scientists discuss when automation will replace truck drivers, the actual state of the industry isn’t there yet. Because of the inconveniences of the job, the number of truck drivers continues to decrease, which especially strains the industry in the US and Australia where the demand for transportation is constantly growing.
Drivers’ work is no walk in the park: they travel up to 4,900 kilometres per week, up to 11 hours in a row, and in sometimes inclement conditions. There are too many risks and too many actions still have to be done manually. Driver experience should be radically enhanced.
Calculating the time of the mission with a calculator, rating stops on a paper map, doing lots of paperwork should be filed in the annals of history. All the everyday concerns of a trucker such as checking the weather conditions and planning the optimal trip route need to be performed inside a single application.
The primary reason why Uber became so successful is that it spotted a gap in the industry – there was no tool connecting passengers and drivers directly with the ability to track the trip route. In fact, a logistics software application developed for a transportation service will tackle the same problem Uber solved.
A service for shippers and carriers to connect and find corresponding requests will eliminate empty mileage and the wastage that it brings. Drivers won’t return from the mission with empty lorries and there will be less fuel consumed for no reason and less overall carbon footprint.
Apart from matching orders with drivers, a logistics app should allow for the improvement of truck routes. Drivers will be able to find the route suitable for a particular vehicle and load type, consider available stops, nearby gas stations, and road conditions in one application.
Analysts show a vast array of already launched startups aimed at digitising the industry. But these logistics management solutions don’t take into account all the aspects of the freight industry.
Logistics involves many nuances. It’s easier to provide instant taxi prices but with freighting, prices will vary depending on the time, direction, type and size of the load, and so on. Existing applications, eager to become ‘the Uber for trucks,’ face too many challenges when it comes to standardisation and convenience.
Uber itself created a delivery logistics app, Uber Freight, which was launched in the US in 2017 and plans to expand into Europe in 2019. This is a network for carriers and shippers to create and tender loads and track them in real time. It allows drivers to post their availability and preferences and shows available loads to choose from.
No matter how reasonable and convenient it sounds, Uber Freight hasn’t achieved mass adoption, and many people claim it will fail in the near future. Uber Freight has even been compared to Groupon: it’s believed that the service will attract users with a cheaper price but then shortly increase the fees. There is a reason for that suspicion; Uber drivers had to travel 3.79 km to make $10 in 2013. In 2016, they had to go 7.58 km for the same profit.
However, Uber Freight is introducing many advancements. The Lane Explorer feature implemented in 2018 represents an improvement in the calculation of real-time market-based rates for truckers. They apply predictive analytics not only to calculate prices but also to understand how likely it is that a truck will pick up a certain load.
As Kevin Haugh from Omnitracs points out, Uber Freight lacks many functions. For instance, it’s important to know not only the vehicle characteristics but also hours of service data, legal hours left before a break, and so on. With various competitors joining the market race, there’s the chance that all the gaps will be spotted and these features will be enabled by mobile apps.
Convoy, launched in 2015, managed to attract millions in investments, including funds from some big-name players, and was valued at an estimated $1 billion in 2018. It started from small shippers and then partnered with large companies including Unilever, Anheuser-Busch, and Goodyear. They claim to perform thousands of shipments per week, and recently launched a marketplace of pre-loaded trucks – Convoy Go.
At the moment, Convoy doesn’t charge significantly less than traditional brokers. Its representatives admit that their rates are not always better but they expect to improve these. Since Convoy and Uber Freight are two major competitors in digital freight, it’s interesting that the former, which started as an Uber-like app, recently claimed that it didn’t want to associate its service with the Uber brand anymore.
Amazon is also working on a shipping app for its own services which includes real-time pricing and driving directions. If shipping for Amazon products becomes successful, it’s expected that the service will expand and include third-party shippers.
The impressive investments put into the aforementioned projects show the need for higher transparency and flexibility and clever logistics app development. Many other apps try to connect shippers with carriers: Transfix and Cargomatic were among the first, Trucker Path, uShip, Coyote, and many others are trying to get their slice of the pie too. Most of these digital broker apps experience growth but, in fact, still possess a tiny share of the market.
Evan Armstrong, the owner of a supply chain company, carried out an analysis of 27 digital freight brokers and found out that these startups didn’t solve many industry problems. For example, they don’t have enough functions to specify the type of load and equipment. He argues that in problematic situations, such as when a truck breaks down, it’s impossible to carry on without human intervention.
Moreover, third-party logistics companies are still strong market players. They also implement transport and logistics software for managing freight and, more importantly, have a base of shippers and carriers with well-established relationships.
Since the market is highly competitive and there are pain points yet to solve with new transport and logistics software solutions, there is still room in the industry for innovative and serviceable apps which improve upon existing ones.
Essentially, a logistics application should include a list of shippers and a list of carriers, sorted by location. Route planning, automated price calculator, documentation exchange, and payment system integration are additional tools which will make for a good app.
Both app versions (one for drivers and one for shippers) should include a profile section with contact information. The former will specify their vehicle type and preferences, while the latter will post about the load they need delivered. It’s a good idea to add variables such as the size of cargo, its value, and the industry sector. The app should sort available truckers and freight orders by their location.
Since 67 per cent of drivers use their smartphones when searching for new jobs, trucking logistics software should give them the opportunity to do so. They should be able to choose a load based on capacities and preferences instead of just waiting for a job.
What would be helpful is adding a navigation feature. Drivers should be able to build the best route and access the map both online and offline. The map information should be sensitive to road conditions and the weather. A high rate of heavy vehicle accidents shows just how desperately the industry needs such a logistics management software solution.
At MadAppGang we worked on a project for a large transportation company and had to make an easy-to-use solution which was suitable for the target region. Atlas, the app we made, allows truckers to plan their route in a more effective way and track updates in real time.
We had to design an efficient navigation system, which required the inclusion of lots of geopoints but making them usable. We created a driver-friendly and affordable application which wouldn’t only be an online logistics solution but would also function offline. For such purposes, we used the open source platform Mapbox and developed our own library for the clustering of geodata.
The app should provide drivers with transparent payment information. The crucial challenge for logistics software development is calculating the rate for each delivery based on complex data about the load type and the trip length. What is now being introduced by existing applications, including Convoy, is the option for drivers to bid. Although, there are complaints that bidding for the load would slow down the app.
The current market competition revolves around developing the most effective pricing engine. For example, Transfix implemented a new variable in 2018 which calculates the rate by taking into account the weather, demand, and geographical features. It’s a self-learning system which can adapt to carriers’ preferences. This is the direction every transportation app should take.
What shippers are primarily concerned about are security and speed of delivery. With an option to exchange documentation and receipts via the app, both parties get the proof they need.
A truck app should also take care of payments, offering drivers direct transactions. For example, in Convoy, a job is automatically paid once the bill of lading is uploaded into the system.
A typical five-star rating system should be applied for both parties included in the service. Shippers should be able to rate truckers and drivers should have the possibility to rate shipping companies, warehouses, and rest stops.
For example, Uber Freight already implemented a feature allowing the the rating of shipping facilities. Since 80 per cent of carriers refuse to take loads from facilities where they had a negative experience, they appreciate such an option. Another opportunity pioneered by Uber Freight is the ability to rate warehouses. Waiting time at warehouses, often unpaid, is also a huge problem drivers face. These features are something all similar apps should embrace.
Rating systems can make the process of building the route easier for truckers and will probably lead to some improvements in the conditions of warehouses and parking and rest stops.
There are many technological advancements which are soon expected to be an integral part of freight logistics software and will dramatically increase functionality. For example, voice assistant technology allows for the kind of hands-free operation drivers want to be able to perform.
There are actually many additional functions which could be added to a trucking and freighting app. But more importantly, the more driver-friendly core features are, the more likely the app is to expand and prosper.
By replacing traditional service with a digital approach, Uber created a space where automation effectively served both clients and providers. More importantly, they laid a path for other entrepreneurial apps and digital logistics solutions to follow within numerous industries; the challenge is addressing the specific needs of each.
While scientists may have their eyes firmly on the self-driving cars of the future, at present, the need for automated solutions for drivers is top of the industry’s agenda. There is a very real gap in the market which should be filled by an application which connects shippers with carriers without wasting valuable time and resources.
Demand for this type of logistics software in Australia, the US, China, India, and many more countries, is visible.
Do you have an idea for a logistics and shipping app? Want to hit the road running with a fully functional user-friendly approach? Get in touch with us if you’d like to talk it over or discuss your solution.
14 May 2019
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