A new generation of online businesses wants to cut the transportation middleman out of the warehousing and distribution equation. These new marketplaces offer manufacturers and distributors greater convenience and efficiency by directly matching them with freight carriers, cutting down on red tape and lag time. Be cautious before taking the plunge with an online freight marketplace, however. Without proper research and planning, you might not achieve the desired cost savings and efficiencies.
How Online Marketplaces Work
Online freight marketplaces allow manufacturers and distributors to:
- Directly solicit shipping quotes online
- Incorporate real-time travel data
- Anticipate delivery times
These marketplaces use satellite tracking and mobile technology, which provide direct access for carriers and shippers. They also eliminate inefficiencies associated with paper work orders, quote submissions and lengthy telephone calls to haggle over price.
For example, Post.Bid.Ship. has more than 2,000 trucks in its national network that are capable of various types of cargo transport, including partial loads, full loads and refrigerated loads. Shippers submit proposals and then prescreened carriers bid on jobs based on the specifications provided.
Another online freight marketplace is 10-4 Systems. It connects shippers to carriers using an automated transportation exchange. Carriers use 10-4 for free. Instead of paying a monthly fee, shippers pay 10-4 fees based on the contracts they obtain through the marketplace.
Auctions are another business model used by online freight marketplaces, such as uShip. Competitive bidding from carriers allows manufacturers and distributors to pay a fraction of the retail rate for shipping services.
Avoiding Potential Pitfalls
Going it alone with an online freight marketplace is not for the inexperienced. You must know the exact specifications of your order before submitting a proposal online, because it may be difficult to adjust the terms afterward.
You must also be familiar with daily fluctuations in shipping costs. Like any other commodity, transportation prices ebb and flow with supply and demand. Peak shipping months can quickly bust your freight budget, so you’ll benefit from planning ahead.
Navigating the Online Freight Marketplace
Online freight marketplaces bring added convenience and cost savings to the table, but different marketplaces offer significantly different business models. Read all of the fine print before using one of these marketplaces for your shipping needs. A financial professional can help you evaluate your options and project how much you could save with an online freight marketplace in comparison to a traditional brick-and-mortar company.