Internet-based load matching services have been around for years. For shippers, freight brokers and 3PL’s seeking carriers to move loads and for carriers seeking loads to move, internet-based load boards have been a very valuable resource to the transportation industry.
Like all segments of the industry, these types of services have been impacted by the current recession. To provide the readers of this blog with an update on what is happening, I interviewed two industry players. They are Claudia Milicevic, TransCore’s Link Logistics General Manager for its Canadian load matching service and one of the industry’s largest players and Roy Thacker, President of LoadSurfer Corporation, a Milton, Ontario-based company, that began operations in April 2009. Here is what they had to say.
The Impact of the Recession on Load-Matching Services
“I think the recession has had some degree of impact on the load boards,” commented Roy. “As we all know, there is a natural churn to the industry with so many companies coming and going (in good times and in bad). In the good times, that natural churn tends to have a positive effect on the size of the subscriber bases of the major boards. In this recession, there have been many companies and personnel exiting the industry with fewer new companies coming into the mix. The result is that the natural churn has been mostly downward. From the people that we have been talking to, it would seem that many companies, especially the smaller ones, have either cancelled their load board subscription because they can no longer justify it or they have scaled down their subscription to a much lower package with less features. Although this is merely our observation, there must be a certain degree of truth to it since we are seeing the major players in Canada starting to advertise their Load Matching services heavily; something that they did not have to do when times were good.”
“We have experienced higher turnover than usual,” stated Claudia. “We’ve lost business due to companies that have closed. There are other companies however that have joined because they may have lost a steady contract or can’t fill their trucks to capacity due to lower volumes. These companies have joined Loadlink to find freight to fill their trucks.”
Industry Changes over the past 3 Years
Claudia commented that “the industry is reflective of the economy. A few years ago when the economy was in much better shape, customers were looking for features and functionality that would enhance their daily use and supplementary services that were complimentary to the basic offerings. Today, when times are much tougher, speed of download, ease of use and number of loads and trucks are first and foremost for all of our subscribers. People need to get loaded quickly and keep their trucks running at capacity. Other ancillary services are not as important as they were a few years ago.”
“One of the biggest changes recently has been the recent purchase of GetLoaded by Roper Industries in the summer of 2008” Roy stated. “This normally would not be that significant except Roper Industries also owns TransCore which in turn owns Loadlink and DAT. The end result is that although there are 4 major load boards in North America, 3 of them are owned directly or indirectly by the same shareholders.
Another big change in recent years has been in the number of smaller load boards popping up here and there. There are probably 40 load boards out there now with the majority being focused on the USA market. Although a couple of them are doing quite well, the majority seem to be operated by various industry suppliers who are looking to draw traffic to their site in order to sell users on other products.”
Roy and Claudia were questioned on how the industry has changed from the perspective of a shipper, carrier or 3PL. Claudia mentioned that “there are not a lot of changes from how they used Loadlink a year ago. The economy was in similar shape and they were using it in a similar fashion to how it’s being used today."
Roy expressed a somewhat different view. “I think that there is a big push to deal with people that you know and trust. There has been a lot of fraud being perpetuated on the load boards so a lot of subscribers have been telling us that they would rather deal with carriers and brokers that they are familiar with. Credit data also plays a key role. People really want to know that they are going to get paid at the end of the day.”
Where is this Industry going over the next 2 Years?
Roy sees some major changes. “Having worked in transportation for 20+ years, I have seen the balance of power shift several times. With freight still being scarce, the shippers and brokers hold the balance of power. However, a lot of people seem to have forgotten about the driver shortage that existed a few short years ago. Due to the fact that freight volumes dropped so far and so fast, it created the illusion that the driver/capacity shortage has gone away. This is not true at all. The fact that so many drivers have left the market due to retirement, greener pastures, etc., what was probably a driver/capacity shortage of 4-5% is now probably 8-10%. The end result is that as the economy emerges from recession, the carriers that manage to hang in there are going to be in the driver’s seat. Rates will increase and brokers will be left scrambling to cover their loads.
As far as Load Surfer is concerned, we expect to continue our development over the next two years. We expect to add social media, our own version, not what Facebook and MySpace offer. They don’t work for our industry as well as the capital portion which we have started on with our new partnership with J D Factors. If one is to look at the internet 5, 6, 7, 8 years ago, it was largely an untapped resource. It was basically an electronic pipeline that contained millions upon millions of bits of data. As technology improved and companies found better ways to access and utilize the information, the internet became a more and more powerful tool and more importantly; prevalent in our daily lives. We look at a freight matching board in the same way.
Whereas most of the major boards out there today are based upon the user connecting to the load board through a common interface, we look at it more as if our product is a pipeline of sorts that contains freight, equipment and most importantly capital. We recognize that there are a multitude of different users and many ways that they would like to connect. In order to give them what they want, we are in the process of creating multiple methods to access and utilize the data in our pipeline. Obviously, many companies will want to connect via a web site which is the traditional method. However, many other companies use dispatching programs meaning that the average user has to flip from screen to screen to find loads and equipment on a load board(s) and then enter the data into their dispatch system.
We are changing all of that. Currently, Load Surfer is integrated to 4 different dispatching systems, Axon, Infosite Technologies, TransPlus and Millogiciel. Users of those systems can actually edit, update and post their freight and equipment directly from their dispatching software. Future integrations will allow them to retrieve the loads back into their dispatch.
Our recent partnership with J D Factors adds another dimension to the pipeline. Currently, J D Factors’ customers can determine at a glance whether or not a particular load on our system is factorable by looking for a money bag next to the load. The bottom line is that Load Surfer will end up being an information pipeline of sorts that looks like a cross between a traditional load board, Facebook and eBay. It will be very exciting.”
For Claudia, “the next two years will be determined by what’s happening in the economy. We always strive to meet the needs of our customers. They let us know what their requirements are and we implement solutions to address their needs.”
Value Propositions of Internet-Based Load Matching Services
“We are the largest freight matching service in Canada with the largest database and with reputable customers posting to the network. We have also integrated to TransCore’s DAT network to provide the largest database of US based subscribers that appear in the Loadlink program,” stated Claudia.
“We sell our solutions to the Canadian transportation industry. Carriers, private fleets, freight forwarders, brokers, 3PL’s that need freight shipped or a truck loaded will benefit from Loadlink. We are confident that our subscribers will receive additional freight from our program or will find the trucks needed to move their loads and that it will pay for itself many times over. We provide a full 30 day money back guarantee if they are not satisfied. Close to 100% of all new subscribers that have subscribed to Loadlink have booked freight off Loadlink and the system has paid for itself with the extra freight they’ve booked.
We are extremely diligent in our acceptance process. We collect and validate a lot of documentation on an organization prior to allowing them to become a subscriber. We provide a lot of information to our customers on other members, including, but not limited to D&B credit reports, updated weekly, Equifax credit reports including daily alert notifications, TransCredit credit reports updated monthly as well as guaranteed payment indicators. We do provide our customers with many tools to enable them to make an accurate decision as to whether or not they want to deal with a potential counter party through Loadlink.
TransCore has been in business for 70 years. Loadlink has been operating in Canada for close to 20. We have longstanding customers and have built strong relationships with our customers. There are many players in the industry. Every year there are always players that enter and exit the industry. Some offer their services at low cost. Some offer their services at no cost. If it results in additional effort put forth and time spent, some actually cost you a lot more in time wasted. Many do not exercise due diligence to screen companies prior to permitting them to post on their service. Some may say that they review some documentation, but we exercise the highest quality control for all subscribers.”
Roy commented that “the one thing that all of those large competitors have in common is that they all started small and grew. None of them started out as the conglomerates that we are familiar with today. Having been in the load matching industry for many years, I have seen what makes some load boards successful and others fail. Perhaps the most common thing among the successful load boards is that they all started out as very good sales and marketing organizations. As they grew, they shifted away from that and it has not been lost on the industry. We have been very strong in both of those areas and we are now finding that people actually know about us when we call.
Another thing that the other load boards used to be very good at is customer service. Customers need to know that you care about them and will respond quickly and fairly to their concerns. At Load Surfer, we encourage feedback and suggestions and most importantly, we acknowledge and act on them. People seem to appreciate that so far. Load Surfer is trying not to be just another load board. We are trying to position ourselves as a company that cares about its people, its customers and its environment. We are trying to create an online community that promotes fair business practices. This is probably a tall order in the industry that we work in, but we are going to do our best to achieve this goal.
We target carriers and brokers of all shapes and sizes. Our value proposition is based on price, product and service. Our price is 30-50% less expensive than our closest competition. In today’s tough operating environment, this is a very important selling feature. Our product is 100% web based and is built using 2009 technology. (In terms of) service, we aim to take care of our customers as best we can. We try to deal with their questions and concerns as quickly as possible. In many cases, we have had customers who were very surprised to have a customer service representative get back to them a couple of minutes after submitting a request on the web.
Our approach is not that much different from the the other Load Boards used to do. The difference is that as they started to grow, their motivations and value changed and the people who suffer are the subscribers. It is our firm belief that if we treat and continue to treat our customers as we expect to be treated, we will be very successful. It is a pretty simple recipe but I know for a fact that it works.”
Since this is such a technology driven industry and since we live in such a fast changing world, where will the technology in this industry take us? This is what Roy had to say.
“Smart phones are becoming more and more popular and some of the load board guys have started to offer applications that work on these devices. Without any modification, Load Surfer actually runs on any web enabled phone. Probably the best way to give you a vision of where I see technology going is to share a small excerpt from our original business plan that talks about what is possible in today’s technology:
A potential enhancement to this product could involve adding a ‘personal intuition’ feature that would take into account the carrier’s current database and freight contracts in its planning. For example, a truck could be scheduled on a contract load from Toronto to Dallas. Based on this information, the system would know that it was going to have equipment available in Dallas. It would then analyze the upcoming customer freight possibilities for the truck and watch for freight opportunities coming available to move the truck to the next customer load pickup point. Of course, the system would have to consider other equipment coming available as well as freight composites. As an example, a truck emptying in Dallas is assigned a load from the freight matching system that goes from Dallas to Little Rock, AK, where they have a customer load taking the truck back to Toronto. This system could eventually be built to take into account a driver’s driving habits and preferences with regard to elements like home time, etc., an added feature that would do a great deal to help companies reduce turnover and increase driver retention.”
Clearly the load matching service industry is surviving the downturn and is being propelled in new directions by changes in consumer demand, economics and technology. These companies provide a very valuable service to the transportation industry.
For some 3PL’s, load matching boards are becoming the option of last resort as they seek to build their own internal carrier base. One problem is the reliability of carriers and the documented cases of unsavoury carriers promising to handle orders at attractive rates and disappearing in the middle of the night. The load boards promise to investigate but have little leverage as their goal is to sell more memberships and increase their own revenue. Some load boards only collect the data and post operating authority and credit information but do not guarantee users of their accuracy. As a result, 3PL’s cannot blindly assume that the carriers’ stated insurance liability is accurate. There is still a requirement to perform due diligence.
The larger 3PLs have invested heavily in TMS systems that download load information to multiple load boards at the click of a mouse and rely on these load matching services to find cheaper carriers. There is still a lot of business done on a transactional basis. Some 3PL’s offer very low rates on certain lanes (i.e. Toronto to Chicago at $500) in order to attract the desperate or bottom feeder carriers. A number of 3PL’s that subscribed to multiple load boards have chosen to reduce the number of load matching services they use to save money. Due to cost considerations and the large membership of TransCore’s Loadlink service, it has become the default load board.
As the economy improves, there will be new entrants into the 3PL and trucking industries. These companies will need the data base of carriers and loads offered by the load matching services. If we face a more severe driver shortage in the years ahead, load boards could become an even more critical resource to find truck capacity. This relatively young industry still has a long and exciting future.