Shipwell On Driving Logistics Innovation Through Connectivity

Efforts to disrupt the logistics and freight industry have multiplied in recent years, particularly with the emergence of technologies like the Internet of Things and blockchain. These tools often promise to disrupt the way goods move through the supply chain, but in the U.S., an examination of the market suggests legacy solutions remain commonplace.

This is particularly true for smaller fleets, which make up the vast majority of trucking operations in the country. Jason Traff, president and co-founder of freight trucking company Shipwell, says these characteristics have created a highly fragmented market that, while large and lucrative, has seen little innovation.

“It’s a trillion-dollar industry yet to be significantly altered by technology,” he said, adding that this is peculiar, considering it’s one of the few industries with limited red tape that can prevent digital disruption from taking place.

In fact, he said, regulation has actually sparked a significant technological advancement, in the form of the Federal Motor Carrier Safety Administration’s rules that require carriers to digitize driver time-tracking data via electronic logging device (ELD), which came into effect earlier this year. Traff described this move as “revolutionary,” and not only because it provides the industry with greater accuracy when assessing how long an employee has been driving.

“Until recently, the only way to reach truckers and connect with them was through cell phone,” he explained. “And mobile apps are finicky.”

ELD requirements, which see a device plug into a truck’s on-board diagnostics system, mean technology companies like Shipwell are able to integrate into that ELD to find a new way to connect with truckers. In the same vein as Internet of Things technology, this innovation streamlines solution providers’ efforts to connect to such a highly fragmented industry. Ninety percent of trucking fleets in the U.S. contain six vehicles or fewer, Traff said.

Being able to connect with each other is the crux of any technological progress in supply chains, with that connectivity key to data sharing and communication.

Historically, however, fragmentation has been a difficult beast to tackle.

“Wherever you are, 80 percent of everything you see was moved by a truck at some point,” said Traff. “What’s really important is that 80 percent of the industry uses Excel as a viable way to keep track of shipments. That means you’re never going to get to the point where it is proactive, where it does something for you.”

Freight is a massive spend category for businesses, even smaller ones. Freightos analysis found earlier this year that 50 percent of SMBs still rely on spreadsheets to manage their shipments. Even businesses with only a handful of shipments a year spend more than $10,000 every month on freight costs, and yet most find late shipments to be a common problem, and more than 42 percent of business owners reported spending more than two hours managing a single shipment.

Business partners on all sides of a shipment lack visibility into the progress of the order, researchers added. Even for larger companies, only about one-tenth of corporates said they feel their freight providers are “technologically advanced.”

Separate research from InMotion Global found that, while one-third of carriers with fleets of more than 10 trucks are using a transportation management system solution, that figure drops to 17 percent for companies operating fewer than five trucks in their fleet.

As a platform that focuses on connectivity, Shipwell offers a portal on which companies can manage their freight operations – including booking shipments and managing the data that goes along with it, from transaction documents to shipment tracking. Traff noted that payments are also a key component to enhancing the shipping and logistics space, particularly as paper checks remain a common payment tool for industry players, and particularly as businesses struggle with manual data entry and complex reconciliation processes as their companies, and their freight spend, grow.

Payments can also be used as an incentive to promote communication and collaboration, Traff explained. When Shipwell operates as a third-party logistics provider, it pays truckers on Net 3-6 day terms (preferably via ACH), rather than the typical Net 15-30 day terms the industry tends to see.

“We do that with the incentive that they help keep the shipment updated,” he explained, adding that faster payment incentivizes trucking firms to enhance transparency for all parties involved.

There may be technologies that vow to transform the shipping and logistics sphere, but that transformation hasn’t yet occurred. Rather, there are tools at play today that can foster interconnectivity, data sharing, communication and a more streamlined experience for companies trying to move goods from Point A to Point B.

While blockchain may have the potential to connect businesses and their data, Traff said a “well-distributed cloud platform” can also offer the same. And while IoT devices may provide enhanced connectivity for business partners in a supply chain, the ELDs now required by regulators present a way to connect those partners through technology that many truckers already have.

“As we move through the journey of connecting and automating supply chains,” said Traff, “the first question is, ‘How can we better connect?’, before ‘How can we better automate?'”