Digital freight networks (DFN) are a new class of freight service providers that combine technology, data, and a dense network of carriers and shippers to reduce the inefficiencies in the freight industry. Unlike traditional brokers and asset-based carriers that focus primarily on transporting freight, DFNs move freight more efficiently while also providing insights that help shippers improve their operational performance.
As digital freight network grows, it creates a flywheel effect that benefits both shippers and carriers. With each new shipper in the network, drivers have more options for hauling loads, fewer empty miles, and fewer wasted hours, allowing them to earn more each day. With each new carrier in the network, capacity increases and shippers benefit from higher service quality. As shipment volume increases across the network, trucks are better utilized and shipping costs come down, leading to better prices and more reliable service.
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Digital freight networks use technology to automate the brokering process and track shipment progress from start to finish, thus they collect an enormous amount of operational data that can then be shared with shippers to help them understand potential inefficiencies in their supply chain, and benchmark how their supply chain operations compare with others in their industry.
Shapes of digital platforms
There is a significant variety of provider types in the market, adopting different business models. According to Arthur D Little, in order to structure the various archetypes, three key differentiating dimensions can be considered.
- Firstly, value-chain focus: digital freight exchanges concentrate predominantly on the non-contracted part of the market, i.e., spot business. However, this is not a fixed constraint. Individual digital players have already entered the contracted business. Aiming towards this segment means providers need to build up new competencies.
- Secondly, decision-making quality: Among the different (digital) business models, quality of decision-making varies strongly. While basic platforms purely display information, advanced environments allow for integration of real-time data and/or advanced analytics to make automated decisions.
- Thirdly, commercial ownership: Another important dimension is whether providers should take full responsibility for the information provided (e.g., via third parties) and services offered. Particularly, simple platforms act as information brokers only. They neither validate offer details nor take any liability or risk for the actual service provided to the client.
The future of operational visibility
Data and insights have become the new currency of the modern supply chain. Shippers with the most data, and the ability to get practical insights from that data, stand to lower their shipping costs, improve customer service, and contribute to top-line business growth. Those that continue to operate without visibility pay the price by way of wasted spend, unchecked carbon emissions, and carrier dissatisfaction. In this case, digital freight networks enable shippers to gather data at a massive scale and get insights that can improve the efficiency of their supply chains.
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