This article discusses the many ways in which truck freight is arranged in the US. The author makes the case that load boards are no longer that useful to truckers, and this is quite possibly due to the natural growth in the chase for users, and the users themselves gaming the system. It’s to be expected in our technical world.
Private freight marketplaces are attempts to fix the issues. They have their drawbacks. Another approach is a ‘centralized, reaggregated capacity marketplace’ optimized for integrity and carrier quality.
That’s what Newtrul founded in 2018, is offering. It appears they are offering their service to brokers rather than carriers. They address the carrier quality issue by only signing up carriers that have seven customers they’ve passed compliance checks with.
It’s not clear how Newtrul is doing the aggregation of capacity. Doubtless it is driven by an optimization or AI routine of some sort.
I think these approaches are interesting and useful. They induce some cooperation into a process that was distinctively siloed and labor-intensive previously. Markets will determine who will do cooperation the best.
In December, Drewry published on their blog this article describing four significant disruptions likely to happen to shipping in 2022.
I feel these are right on target for the business, and will affect international shippers of all sizes, and intermediaries, such as brokers and freight forwarders.
I’m especially concerned with disruption in the resale of blocks of container space. Drewry’s discussion of MQCs (Minimum Quantity Commitments) indicates that contracts being tried out will require the MQC to be evenly spread across the year. This will be very hard for most forwarders to meet. While some of the business is of the level-quantity, just-in-time sort, lots of other shippers have seasonal blips in their demand. Those seasonal demands cannot be supported by regular fixed-quantity shipments; inventory costs would balloon, jeopardizing the business.
I’m using the word ‘seasonal’ in a time-series sense, not a climate sense; there is a lot of business that experiences ups and downs in demand, not related to weather, but to the needs of their customers. Clothing retail offers an example; summer wardrobes need to be brought in in early spring; winter clothes in late summer. Christmas tree lights and trees themselves are only needed in September-October to be ready for the Thanksgiving to Christmas buying period.
Smaller brokers and forwarders usually exist because they can provide special services to smaller shippers. They need to get access to space in order to help these shippers. Having to purchase on the spot market exclusively will mean that many small shippers will be handicapped.
But we cannot expect the brokers and forwarders to provide inventory consolidation services for the shippers who have these seasonal needs.
I recommend reading the brief article provided.
Drewry – Browse Recent Opinion Articles – New disruptions to supply chains in 2022 and how international shippers can respond
This complaint from freight forwarders is starting to resonate. It appears the major container carriers are gradually refusing to sell bulk space on container ships to brokers and forwarders, instead making them buy on the spot market.
One of the issues is to determine whether the liner companies are favoring large brokers and forwarders with discounted contracts, to the disadvantage of smaller brokers. Are there sweetheart deals? I am betting that for sure there will be space available from large brokers to smaller brokers. Price discipline is notoriously hard to enforce.
Is it anti-competitive to offer spot prices? No, I think not. Is it anti-competitive to offer different prices to different groups? Quite possibly. It’s worth a review by government agencies and regulators.
In competitive economics, fairness is not a principle; however, in political life it could be seen as unfair to drive out of business a group of substantial size who provide customized services of a very precise nature in a niche, to some shippers. Those skills may have value to society as a whole that are not captured in prices. That’s where regulation comes in.