Last Wednesday LoadExpress expanded its service to enable 3PLs and Freight Brokers to fully use the platform to post, cover, execute and manage freight. Now LoadExpress has come full circle to have all 3 principal parties–shippers, carriers and 3PLs/brokers–conduct business on its marketplace. Shipper and carriers still can choose to deal direct with each other, and enjoy all the benefits that give them. Now they can also choose to deal with 3PLs/brokers, which provide other benefits. So shippers and carriers can have the best of both worlds.
So why did we do this?
First, we go to where the market is. We had 3PLs/brokers approach us to get on the platform because they saw the significant revenue, cost savings and efficiency benefits we provide. We already have about 10 firms signed up and covering loads.
Second, even more important, is the fact that in the truck freight industry, it’s all about scale. In Internet terms, it’s about aggregation and network effects: the more users in a particular network makes that network more valuable, and it usually wins. To wit: Google Search, Facebook, Amazon, LinkedIn, eBay et al. The truck freight industry is famously fragmented. You have 90% of all fleets in the U.S. with <6 trucks, 100,000s of shippers, and 14,000+ registered brokers. Each with its own silo of customers and vendors competing against each other.
LoadExpress now is building up a marketplace with aggregated loads and capacity provided by all users. More capacity provides competition that reduces freight spend and better coverage for shippers. Carriers get a greater customer pool, a choice of dealing direct or with broker, and can make more money with better payment terms. And both can be much more efficient and enjoy reduced overhead and daily hassles.
But it is on small/medium 3PLs/brokers that LoadExpress will have the greatest impact. According to Armstrong Associates, the leading consulting firm on 3PLs, the top 175 brokers have 75% of the gross revenues of the $60 billion domestic freight brokerage industry. The consolidation will continue unabated and accelerate due to ever faster rates of technological and process improvements. The traditional broker with $10 million in revenues who relies on service and relationships, will have no chance in the long term against someone with $300 million and technology.
3PLs and freight brokers need two things to survive and prosper: Scale and Technology. Without those two things, they won’t have the business and required efficiency to drive down costs demanded by the market. Most small/medium firms don’t have the resources or wherewithal to get the scale and technology on their own. In day-to-day operations, the biggest fear is not being able to cover a load, which means immediate lost revenue as well as potential long-term loss from an unfulfilled customer. Even a large broker is not immune from this fear. The longer term fear is being squeezed to death.
LoadExpress solves these problems by providing load and capacity aggregation (Scale) with its freight matching and transportation execution platform (Technology). Using LoadExpress, the smallest broker has an equal opportunity to cover a load as the largest competitor. He who has the capacity wins. The rough analogy is the small merchant on Amazon Marketplace, who has a hard time making sales through its own website or storefront. But with Amazon, it reaches the world. They can have all this without spending a dime in capex or paying upfront fees. LoadExpress only charges a flat transaction fee on each successful shipment.
LoadExpress also provides other meaningful benefits to 3PLs/brokers: 1) saving money by not needing multiple load boards and TMSs, 2) lowering operational cost and aggravations of a manual or disjointed workflow, 3) increasing productivity and service capacity.
So these are the reasons we made this move. We believe it benefits everyone.