Capacity Matching vs. Digital Freight: What’s the Difference?

Posted Sep 12, 2018

There has been a lot of buzz around the capacity crunch and how we got to this point. Simply put, higher freight demand, driver shortages and ELD mandates have severely limited capacity on the road. The increased volume can be tied to economic growth, specifically ecommerce, which has impacted distribution patterns to meet changing consumer demands.

Significant challenges are preventing Logistics Service Providers (LSP) from executing transportation more efficiently to address current market conditions:

• Finding capacity is a less-than-optimal, manual process of selecting carriers based on tribal knowledge that requires making many time-consuming calls.
• Private web portals have limited participation due to industry fragmentation and the resulting large number of sites to navigate. Subsequently, these portals can’t provide a complete view of carrier networks, which results in incomplete or invalid information.
• Traditional load boards make it difficult to qualify carriers due to stale and unverified data, which may result in service risks and higher rates.
• Understanding the capacity availability outside of their network is a guessing game with limited data available.

Given these conditions, some industry newcomers have introduced solutions focused on shippers directly booking carriers through automation. Their strategy aims to disintermediate 3PLs and freight brokers, ignoring the deep expertise and relationships these companies bring to a complex and fragmented industry.

Unlike freight matching solutions, capacity matching empowers freight brokers and 3PLs by helping them find capacity for open customer loads through software automation. LSPs play a critical role in the truckload market by establishing relationships with carriers and making smaller fleets, who make up the vast majority of capacity, more accessible. LSPs have the expertise with these carriers (often unknown to their shipper customers) to find capacity that is generally inaccessible and/or to handle specific needs such as urban delivery, refrigeration, special lanes, etc.

Although automating load information is the first step in tackling freight capacity problems, the ultimate goal is finding and booking the most qualified carrier. This requires intelligent capacity matching, which is enabled by actionable, verifiable data on a large scale. The ability of freight brokers and 3PLs to access capacity from a large variety of carriers make them a vital resource to shippers and integral to connecting stakeholders in the transportation industry.

As a result, LSPs are weighing potential strategies to address the capacity crunch, including data-driven capacity matching solutions. New cloud-based network solutions that provide actionable and verifiable capacity data are gaining industry recognition as cost-effective, easily accessible investments.

If you are interested in learning more about creating a competitive advantage with capacity matching, check out our eBook that dives deeper into the benefits for your operation.