Automating for the sake of automating accomplishes little in the way of supply chain optimization.
“People have become obsessed with these automation messages about digital brokerages,” Loadsmart co-founder and co-CEO Felipe Capella told FreightWaves. “Often when you automate the internal inefficiencies of a brokerage, there is no added value to the shippers or carriers. [Shippers and carriers] don’t care about your inefficiencies. We need to start talking about the value proposition [of digital brokerages] to shippers and carriers.”
Adding value was the reason for Loadsmart’s recent strategic moves, according to Capella.
Supply-led capacity platform
An example of Loadsmart’s value-added approach is its August announcement that it is working with Home Depot to revolutionize the home improvement retailer’s approach toward its overall supply chain capabilities.
Capella explained that Home Depot recently started sourcing its own transportation for vendors to leverage its large flatbed footprint. Instead of vendors selling their products to Home Depot with added transportation costs, the retailer now routes shipments with its own dedicated capacity.
Often when fleets are dedicated to a one shipper like this, carriers find themselves charging more to cover a likely empty backhaul. Using Loadsmart’s supply-led platform Flatbed Messenger, Home Depot can now find its carriers backhauls, driving down their transportation costs.
“Home Depot’s flatbed transportation spend is going to keep growing aggressively over the next two or three years,” said Capella. “Home Depot was smart enough to see that in order for them to benefit from that growth, they should leverage the needed capacity for other shippers. If you have a truck delivered at Home Depot that is constantly backhauling empty, you have an opportunity to get them a load, bringing down costs for both shipments, which goes directly to your bottom line.”
While Capella said creating the automated technology behind the solution was not easy, the forward-thinking, supply-led option is an example of how digital freight providers should be using technology with their customers, adding value to the shipper-broker relationship.
Value-added trucking solutions through M&A
Capella said Loadsmart also is investing in its carriers, which have concerns around wait times and the decision-making processes behind choosing loads. Instead of building these products in-house, Loadsmart leaned on its investors to acquire the value-adding products for its carrier network.
“We cannot build every technology by ourselves,” he said. “We have tremendous support from our investors to try to identify solutions out there that add value to our customers including our carriers.”
In early November, Loadsmart announced it had acquired two solutions, trucking management system Kamion and warehouse dock scheduling software Opendock to help carriers improve their overall operations.
Capella said these acquisitions give Loadsmart tools to enable carriers to grow their businesses with Kamion and provide shippers scheduling software through Opendock.
“Opendock currently runs around 600,000 appointments per month,” he said. “We have customers that give us their demand by API as well, so now we know what trucks are arriving to a specific warehouse at any given time and we can match this to a shipment coming out of that warehouse, eliminating deadhead.
“When it comes to Kamion, we now have a full platform for carriers to run their whole business on,” Capella said. “Small carriers in particular wake up and open up 10 different load boards trying to match their trucks up with shipments. Carriers can have that load board data sent directly to them through Kamion.”
He explained that with Kamion, carriers will have the option to see loads that aren’t organized by Loadsmart, and the loads that are being offered by Loadsmart will include transparency into its fixed 8% margin for Kamion.
“In order to build better trust with our carriers, we decided to fix our margin, making us one of the first brokers to be completely transparent with how much money they are making,” he said. “I think one of the biggest issues this industry has is this competition between people that should be collaborating and this is our way of fostering a new sense of collaboration.”
Capella has been leading Loadsmart in its value-adding mission since the company’s inception in 2015.
“When we first started Loadsmart, we launched our instant pricing system that booked loads via the web. And guess what? Everyone is doing instant pricing and instant booking via APIs [application programming interfaces],” he said. “We would love to start this new trend of value-focused initiatives for shippers and carriers and see brokers and 3PLs move in that same direction.”
But Capella believes that is easier said than done for his competition and that getting the entire brokerage industry on the same page will take time.
“We have a tech team of 160 people today and I think very few brokers out there have this kind of large team that can build a cloud-based technology infrastructure that allows you to absorb new technology. It’s actually pretty complicated to build,” he said.
“Making these changes is a marathon, not a sprint. But I think leaders should realize that you’re not going to get a lot of benefit by trying to build volume with negative margins. The goal here is to be focused on value-adding technology and cloud adoption, not in volume building.”