As the logistics industry accelerates its embrace of technological innovation, Silicon Valley elites are turning their attention to digital transformation in freight transportation. A battle among "on-demand" app-based freight platforms has begun, attracting significant investment and attention. Faced with challenges like tight capacity and rising freight rates, shippers are seeking more efficient and convenient transportation solutions.
To better understand this trend, Logistics Management magazine invited three industry experts to discuss the future of digital freight: John Larkin, Managing Director of Transportation & Logistics at Stifel Equity Research; Chris Cunnane, Senior Analyst for Supply Chain & Logistics at ARC Advisory Group; and Evan Armstrong, President of third-party logistics analysis firm Armstrong & Associates.
Defining the "On-Demand" or "App-Based Freight" Model
Evan Armstrong agreed with this definition, emphasizing that these platforms primarily aim to match shippers' needs with carriers' capacity through digital or mobile platforms (typically apps).
Key Players and Uber's Market Impact
Chris Cunnane noted that hundreds of millions of dollars have flowed into both long-haul and last-mile markets. Uber and Amazon aspire to lead in digital freight matching due to their substantial resources. Other major players include Fourkites, Cargomatic, Convoy, and CargoX in long-haul, while last-mile startups like Instacart and Deliv have raised over $500 million.
Determining Factors for Long-Term Success
John Larkin identified key success factors: sufficient funding, deep freight expertise, achieving scale ($1B+ revenue), lowering transaction costs through automation, and delivering superior service. Future leaders must also optimize transportation modes while maintaining service standards and potentially adopt blockchain.
Market Outlook in Five Years
John Larkin predicts five to eight major players will emerge with strong technology, broad services, scale, and proven cost-saving capabilities. Established firms like C.H. Robinson, Coyote, and TQL will likely dominate, while tech giants like Amazon and Uber may become significant players.
Chris Cunnane expects consolidation will reduce the number of players, with many unable to sustain operations. While Uber and Amazon will gain some share, market complexities will limit true scalability, especially given existing transportation execution systems worth $600 million that already provide similar functionality.