Digital Freight Brokerage Market

Market Overview

The global digital freight brokerage market size was valued at USD 854.9 Million in 2019 and is expected to grow at a CAGR of 31.3% during the forecast period, 2020–2027.

The digital freight brokerage market is primarily driven by increased digitalisation in the freight brokerage process to mitigate inefficiencies in the overall system. Third-party logistics companies aim to close these gaps for a commission; however, through a manual process that can sometimes leave drivers frustrated — and empty, still. For instance, a truck’s average empty mileage can run anywhere from 12% to 28%. The overall estimation of American trucks’ annual empty miles is 50 billion miles, and USD 1.38 is the average operating cost per mile in the trucking industry. In North America, more than 70% of all freight is moved via road, of which the for-hire market accounts for 60%, with nearly 34% of that market, in turn, accounted for by spot brokerage.

In addition, the Europe market is experiencing a severe shortage of drivers, and 21% of the total kilometres travelled are empty. The inefficiency of this scale results in shippers struggling to find available drivers to move their goods. Such empty miles primarily result from the inherent opacity and slowness of traditional road-freight brokerage processes, which has created room for the growth of the digital freight brokerage market as these solutions match shipper freight with carrier capacity.

Market Dynamics

The growing usage of blockchain in transportation and logistics systems is widening the overall scope of market growth. Blockchain technology facilitates the process of recording transactions and tracking assets in a business network. Managing truck efficiency is an inefficient business, and manufacturers have a hard time finding trucks for transportation. As per the American Trucking Association, approximately 3.5 million truck drivers are employed by roughly 1.5 million trucking companies; however, 90% of these companies own six trucks or fewer. The traceability and transparency of blockchain could present an enormous opportunity and facilitate coordination between the shipper, carrier, and digital freight brokerage provider. Therefore, blockchain technology offers a significant opportunity to makes the entire trucking supply chain more efficient by offering secure networks where all parties can collaborate.

Regional Analysis

North America Market to Grow at a CAGR of 30.2%

The global digital freight brokerage market has been studied across five regions, North America, Europe, Asia-Pacific, South America, the Middle East, and Africa. The North America digital freight brokerage market was valued at USD 284.1 million in 2019 and expected to grow at a CAGR of 30.2% during the forecast period. Empty miles account for a staggering 25–40%, depending on the type of operation, of total road-freight miles every year in North America. They result in fuel wastage, non-productive emissions, lost driver hours, inflated operational costs, and unnecessary road congestion. The need to minimize empty miles presents an enormous opportunity for digital freight brokerage providers to streamline and efficiently handle logistics in North America. As per Freightera, the installation of telematics devices in trucks has jumped exponentially and will cover nearly half the trucks in operation in North America by 2025.

In 2017, the U.S. government mandated that heavy-duty trucks should be equipped with electronic logging devices that digitally track how long truckers drive each day to make sure they comply with federal rules. Digital brokerage solutions offered by Convoy, Uber Freight, Loadsmart, Transfix, Next, and Freightera are modernizing the brokerage process in North America using technology to automate and remove redundancies. Uber Freight has secured more than 30,000 trucking companies and owner-operators as users in North America.

South America Market to Grow at a CAGR of 32.2%

The South America digital freight brokerage market is expected to grow at a CAGR of 32.2% during the forecast period. In South America, shipping and logistics issues are among the most significant challenges holding back the growth of the logistics market. In some areas of South America, packages can take as long as 45 to 60 days to reach their destination and consumers are demanding improvements. Therefore, there is a vast opportunity in the region for digital freight brokerage providers to streamline the logistics process and increase efficiency. Brazil, Chile, Colombia, and Argentina are expected to drive the growth of the digital freight brokerage market in South America.

The high levels of inefficiency in South America’s freight shipping industry have led startups to jump in with technology solutions; for instance, start-ups such as CargoX, Brazil’s ‘Uber for Trucks’ uses AI to ensure that no trucks are running empty. South America may be a challenging market for digital freight brokerage, but the region presents a significant opportunity for startups looking to disrupt ancient operations with the latest technology. Two of the key freight brokering start-ups for cost savings and disrupting regional logistics are briefly discussed below.

uShip

uShip is a platform that works for an array of shipments – cars, motorcycles, animals/pets, heavy equipment, household goods, boats, and more. It caters to the markets in Argentina, Brazil, Colombia, Mexico, Chile, and Peru.

TruckPad

TruckPad is a mobile-based app that connects drivers to loads, with several value-added services expected to be integrated in the near future. It leverages the Brazilian market structure, where almost a third of the truck driver population is comprised of independent truck drivers (circa 1 million drivers).

Segmental Analysis

By Type

• Roadway
• Seaway
• Airway
• Railway

Roadways Segment Dominates the Market by Type

The roadways segment dominated the market and was valued at USD 579.7 million in 2019. Road shipping is a flexible means for the transport of goods; thus, the segment accounts for the largest share in the global digital freight brokerage market. Digital freight brokerage platforms are reshaping the road freight industry by taking on immense inefficiencies related to unused truck capacities. As per DHL, one in four trucks on the road in the U.S. and Europe are driving empty, and loaded trucks are typically only just over 50% loaded.

As per an estimation by Chinese Industrial Securities Co., about two in five (40%) of trucks on the road are traveling empty. Freight brokerage platforms help match shippers and carriers to maximize truckload utilization, decrease deadhead miles, and accelerate shipping times, effectively addressing the inefficiency challenge. In February 2019, Convoy announced that it could automatically match 100% of loads to carriers without human intervention.

By Application

• Food and beverages
• Automotive
• Retail and e-commerce
• Healthcare
• Manufacturing
• Others

Retail and e-Commerce Segment Dominates the Market by Application

The retail and e-commerce segment dominated the market and held a market share of 24.6% in 2019. E-commerce has transformed the retail sector in the past two decades, with fast-changing fashion cycles and trends. Today’s retail and e-commerce industry is a global marketplace, which streamlines transactions between shippers, carriers, and digital freight brokerage providers. Retail giants such as Amazon, eBay, and Alibaba play a crucial role in altering consumer perception and ultimately define the norm of today’s retail industry.

Amazon is expected to control 49% of the U.S. e-commerce market by the end of 2023, making the company a key strategic partner and revenue generator for all its shipping partners. E-commerce is generating more freight that moves by trucks, including drayage and last-mile; thus, the demand for digital freight brokerage solutions is growing in tandem with the growth of the retail and e-commerce industry. Digital brokerage providers offer services to carriers and shippers, such as:

• Multi-stop delivery
• Driver assistance with unloading
• Ability to adjust resources for seasonal highs and lows
• Massive backhaul network with potential for generous savings

Many retail giants are entering the digital freight brokerage market to operate their own retail logistics as well as provide services to other companies. In May 2019, Amazon introduced its digital freight brokerage platform, which enables shippers to get instant quotes and matches them with freight service.

Recent Developments

• In October 2018, EbixCash acquired Routier, a B2B marketplace for trucking logistics in India. Routier focuses on driving the efficiency of market stakeholders by integrating AI, data analytics, and end-to-end streamlined functionality over the cloud. This investment was driven by Routier’s aspiration for a strategic investor that could offer technological expertise, financial strength, and brand recognition to fast-track its penetration in trucking logistics.
• In June 2019, Amazon launched freight.amazon.com, a digital freight brokerage platform for full truckload services in the dry van segment across five eastern U.S. states, Connecticut, Maryland, New Jersey, New York, and Pennsylvania. The brokerage aims to offer full-truckload services on 53-foot trailers.
• In July 2019, Rivigo Services raised USD 65 million in its latest round of funding, led by two of its existing investors Warburg Pincus and SAIF Partners. The company will utilize the funding to strengthen its technology and network coverage.