This commentary was written by Bill Driegert, co-founder of Uber Freight. The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.
For as long as I’ve been in freight, it has been an opaque industry. Carriers, brokers and shippers have always lacked information, as pricing and capacity data were historically gathered through brute force: lots of phone calls, emails and parsing through load boards. We are well into a technology revolution driving transparency and access to data in the freight markets. Before the pandemic, I wrote about how instant pricing and frictionless tendering would transform the logistics industry. At the time, I had no idea how 2020 would unfold or how dramatically the revolution would accelerate.
Uber Freight’s real-time pricing API was in its early stages when COVID hit, with only a handful of implementations. As the pandemic escalated, shippers and carriers were suddenly reacting to dramatic rebalancing of consumer demand within their networks, creating a highly volatile freight market. Accurate, real-time information became essential to ensure the right trucks found the right freight, and API adoption exploded twentyfold year-over-year.
Looking ahead to the rest of 2021, instant pricing and execution are top of mind for more and more providers and shippers. Innovators worldwide are finding new ways to simplify and disintermediate the execution layer of the supply chain, and providers like Uber Freight are meeting the challenge by powering one-touch booking with instant pricing and massive-scale API integrations across all major TMS providers. We’ve extended our own solutions beyond instant spot pricing to instant short-term rates through our rate locking tool. This is a competitive market where both shippers and carriers demand competitive prices, but we can make it more resilient than ever if we prioritize a frictionless, insights-driven booking experience.
It’s an exciting time for logistics. The entire ecosystem is building products to improve shipper and carrier experiences. While we are all hopeful this year will bring a return to normalcy, freight markets are never stable indefinitely. Outside of shocks to the system, like COVID or the electronic logging device mandate back in 2018, freight rates are always in flux due to seasonal cycles and the longer boom-bust cycles of capacity entering and exiting the market. No matter how the market plays out, instant access to information will continue to push the industry forward.
I have long advocated that better execution trumps better planning every time. We can’t predict the future, but if we leverage instant information and execution to react and adapt, we can thrive.
Flexibility and transparency in the RFP process
When I last wrote about the RFP process, I explained how outdated and manual bidding and contracting processes slow down the industry, making shippers and carriers less responsive and less resilient. That’s even more true with today’s unpredictable demand and supply patterns. Spot volume rose 250% when consumers first scrambled for medical and cleaning supplies in March. Supply networks rapidly shifted, and rates consistently rose through the rest of 2020 as carriers and shippers had to adjust to surging and shifting demand patterns. Rates rose 31% in June alone and an additional 8% in July.
To quickly navigate these market fluctuations, shippers leveraged pricing and tendering APIs to supplement their static routing guides and displace outdated spot tendering mechanisms. The bidding process enabled shippers to access prices and move loads in seconds, not days or weeks. That expectation has been normalized and more shippers turned to APIs for instant pricing and real-time capacity. API adoption increased dramatically over the past year, with every major TMS vendor announcing partnerships to launch new capabilities. Uber Freight saw API volumes grow 15% just from May to June, and scale up 150% overall versus pre-COVID volumes. Real-time contracting is the next frontier. With our rate locking tool, small shippers who historically had too little freight to warrant a full RFP but enough freight that continually spot quoting was tedious, now have an effortless option to contract on near-term commitments.
The rising need for instant visibility and pricing automation has never been clearer, and more providers are responding by launching new enterprise shipper products that enable easy-to-use priority controls and one-click access to real-time pricing. The industry is focused on ensuring both shippers and carriers of all sizes can benefit from the new era of transparency and end-to-end freight control. Looking ahead, API adoption and the transparency of up-front pricing will be table stakes, while creating a more adaptable and balanced market.
Automated internal operations
Real-time pricing not only improves the RFP process, but also shippers’ internal operations. By digitizing their pricing and contract decision-making, shippers can automate key touchpoints of both processes and reduce manual friction across the board. The traditional contracting process is incredibly burdensome, taking months and hours of analysis, carrier meetings and multiple rounds of follow-ups. The spot process isn’t much better but happens daily, load by load.
The future is touchless — for shippers, carriers and intermediaries. Just one month into the pandemic, providers like Uber Freight were announcing their commitment to moving tens of thousands of touchless loads.
Imagine freight being so automated that it feels effortless and out of mind. This may seem like a lofty goal, but at Uber Freight, we increased our own operational efficiency significantly throughout 2020, including driving full tracking automation to 78%, while also improving all core service and reliability measures.
As we head further into 2021, API adoption and internal efficiencies will be crucial for the entire logistics industry to prepare for and thrive in a post-COVID world.