Freight exchange trend update: bitcoin and blockchain

Freight exchange trend update: bitcoin and blockchain

The lost revenue and missed freight-carrying opportunity of an empty trailer returning to base is a source of sleepless nights for many fleet managers. Fortunately, freight exchange platforms can address this problem and are becoming more mainstream.

Unused trailer capacity

Unused trailer capacity is a major industry issue. The UK’s Freight Transport Association analyses the level of empty loads each year as part of its Logistics Report. Empty loads have constituted approximately 30% of all trailer journeys since 2011 (Source: Fleetpoint.org).  These empty loads are bad for both business profitability and for the environment due to CO2 fuel emissions for what are, in effect, wasted journeys.

One solution is to equip your trailers with the latest telematics technology to ensure that your drivers are performing optimally and using the most fuel-efficient routes. Telematics will also help you allocate the right trailer and truck combinations. Another solution is to join freight exchange platforms to find loads to carry on return journeys.

Freight exchange platforms today

Uber did the road transport industry a favour in May 2017 by launching Uber Freight, its own freight exchange platform (source: Business Insider).  Even if it has only started operating on a small scale out in Texas between Houston, Dallas and Austin, Uber Freight put spotlights on the media and transport industry and the opportunities that freight exchange can provide.

170+ European freight exchanges!

You have an empty trailer returning from Brno in the Czech Republic? Why not click on Raaltrans or another freight exchange to fill it?  The number of exchanges is growing.  There is a very useful list of European freight exchanges on the internet which includes over 170 exchanges and their basic fee structures.

Cargonexx, a German freight exchange provider which launched in December 2016, claims to have over 1,700 freight companies registered on its platform. In its press release from March 2017, Cargonexx maintains that it is “one of the most successful platforms for lorry transport in Europe”. There appears to be a healthy appetite for freight exchanges among road transport companies but the question is whether there is sufficient demand to support 170+ exchange providers. In the longer term, provider consolidation seems likely.

Future developments?

Examining developments in other parts of the world provides useful insight into what might happen in Europe. In the case of road freight, European developments often follow the USA. Interesting developments there include:

  • Blockchain-based freight transactions

Maria Theresa Dalagan comments in the August 2017 issue of US title Freightwaves that container shipping companies are starting to take a “blockchain-based approach” using a digital currency called “Ethereum” one of 1,037 crypto currencies (source: Benzinga) of which the “Bitcoin” is most high profile. She cites the example of 300cubits, that specialises in enabling transactions in the shipping container industry by using Ethereum. In the medium term, the blockchain is likely to be adopted by the European road transport industry.

  • Trucking Futures Exchange

In February 2017, US companies Transvix and DAT Solutions (a successful US on-demand freight exchange provider with 100 million loads and trucks posted in 2016) formed an alliance to create a Trucking Futures Exchange. This enables shippers to buy delivery contracts or the option to do so at specific prices today. They will be able to hedge against market volatility for transport prices which can vary with the “weather, fuel prices, congestion, seasonality, regulations and macro economics”. (Source: Logistics Management). This project is in early stage development, but, in the long term, a European equivalent could provide an additional revenue source for fleet managers.

The freight exchange platform opportunity

Freight exchange platforms will increasingly become part of everyday operations for the fleet manager and an additional source of revenue, contributing to fuller trailer loads.

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