- Using AI to determine the optimal price
- Finding the perfect match
- The need for greater transparency
- Future prospects and closing thoughts
In the intricate web of the global logistics ecosystem, there is one component that plays a particularly important role — the freight brokerage industry. It acts as a bridge between shippers and carriers, ensuring a smooth and cost-effective journey of goods from point A to point B. However, supply chain operations have become increasingly complex over the years, presenting the industry with a host of new challenges. Coupled with growing customer demands for real-time visibility and dynamic pricing, this has forced freight brokerages to look for alternative solutions for these aspects of their business, with artificial intelligence (AI) emerging as a particularly promising option. In the following chapters, we are going to take a closer look at how some freight brokerages are leveraging the power of AI to revolutionise the way they approach freight matching, dynamic pricing, and real-time visibility.
“Our goal is to calibrate shippers’ transportation strategy to optimise service levels and spend to ultimately remove any potential inefficiencies in freight”.Jonathan Salama, co-founder and CTO of Transfix
Using AI to determine the optimal price
The demand for almost any product or service tends to fluctuate over the course of a year. To account for this fact and derive maximum value from their offerings, a growing number of companies are embracing dynamic pricing. This innovative pricing strategy takes into account a wide range of factors, including historical data, market trends, customer behaviour, competitor pricing, inventory levels, and weather conditions, to determine the optimal price for a product or service at any given time. Even the freight brokerage industry is starting to recognise the benefits offered by dynamic pricing. For instance, the logistics technology company Transfix has developed a new platform that uses AI to determine optimal pricing and load assignments. By analysing data obtained from various sources, such as traffic patterns and weather forecasts, the platform can accurately predict demand and adjust prices accordingly in real time. In addition to enabling it to provide customers with more competitive pricing, the platform also helps Transfix improve its carrier utilisation rates. “This solution will continually evaluate new opportunities and alert shippers when market conditions have shifted in their favour”, explains Jonathan Salama, co-founder and CTO of Transfix. “Our goal is to calibrate shippers’ transportation strategy to optimise service levels and spend to ultimately remove any potential inefficiencies in freight”.
Finding the perfect match
One of the most important aspects of a freight brokerage’s job is to match available loads with available carriers — a process known as freight matching. Typically, freight brokerages would search for available carriers and negotiate prices manually. In addition to making the process time-consuming, this also severely restricted its effectiveness. That’s where AI comes in, allowing freight brokerages to automate the entire process. The logistics technology company Convoy is one of a growing number of companies in this sector that use AI to automatically match shippers and truckers. The company has developed a software platform that uses machine learning algorithms to analyse millions of shipping jobs in real time and suggest a more suitable driver for each type of load. It takes into account a wide range of factors, including location, capacity, and availability, to provide better, more cost-efficient recommendations. It can even help truckers find work for the return trip, ensuring that their trucks drive empty as little as possible. This enables everyone involved to move freight more efficiently and reduce their costs. It even benefits the environment by reducing the amount of carbon dioxide emissions generated by the trucks. The system is characterised by a high degree of transparency, enabling carriers to make better-informed decisions by providing a comprehensive overview of prices offered for each job. At the same time, it provides shippers with instant price quotes, allowing them to compare carriers more easily.
The need for greater transparency
Today’s customers are not happy with simply receiving their shipments on time; they also want to know where the shipments are and what their status is at any given moment. To respond adequately to these growing demands for greater transparency into the shipping process, the freight brokerage industry is increasingly turning to artificial intelligence. The logistics technology company Uber Freight is a prime example of this trend. The company uses AI to analyse data from various sources, such as GPS tracking devices and weather sensors, and provide real-time visibility into the status of the shipment. Its AI-powered platform keeps shippers updated in real time on the shipment’s current location and estimated delivery times. There is even a predictive analytics feature, which enables shippers to anticipate potential delays and disruptions by analysing weather and traffic data and respond to them in a timely manner. The platform benefits carriers as well, making it easier for them to connect with big manufacturers, retailers, distributors, and other large shippers. Rather than wasting time negotiating over phone calls or through faxes, drivers can now use the Uber Freight app to book a shipment with just a few taps on their smartphone’s screen. “The experience that Uber brought to the rides market and personal transportation market was largely absent from the trucking business”, says Bill Driegert, head of operations and co-founder of Uber Freight. “At the core, we are just trying to make the market more efficient”.
“We have repeatedly witnessed the digital transformation of traditional industries — such as banking, travel, healthcare, and education — that lead to extraordinary improvements in performance and efficiency. The logistics industry is ripe for similar transformation, as it remains heavily reliant on analogue systems and processes that create fragmentation and prohibit collaboration”.Ricardo Salgado, co-founder and co-CEO of Loadsmart
Future prospects and closing thoughts
As more and more companies become aware of the benefits offered by the use of AI, the adoption of this innovative technology in the freight brokerage industry is only going to accelerate in the upcoming years. In fact, according to a recent study conducted by the strategic consulting and market research firm BlueWeave Consulting, the global AI in the supply chain market is predicted to reach $20 billion by 2028, growing at a compound annual growth rate (CAGR) of 20.5 per cent. “We have repeatedly witnessed the digital transformation of traditional industries — such as banking, travel, healthcare, and education — that lead to extraordinary improvements in performance and efficiency”, says Ricardo Salgado, co-founder and co-CEO of Loadsmart. “The logistics industry is ripe for similar transformation, as it remains heavily reliant on analogue systems and processes that create fragmentation and prohibit collaboration”.
In conclusion, the freight brokerage industry is undergoing a transformative shift as it leverages the power of artificial intelligence to address the growing complexities of the supply chain. AI is fundamentally reshaping how freight brokerages approach freight matching, pricing strategies, and real-time visibility, leading to a more streamlined and customer-centric approach. By harnessing advanced technologies, the industry is becoming more efficient, responsive to customer demands, and environmentally conscious. As AI continues to evolve, the freight brokerage industry is poised to excel in meeting evolving market demands, while enhancing operational efficiency and delivering an elevated level of service to customers.