Digital technology providers are aiming to arm shippers with the ability to both procure across freight modes and to buy capacity instantly, a capability many freight buyers don’t have or may not have even considered before.
That development has even extended to drayage. San Francisco-based digital domestic freight broker Opus9, for example, said this week it is currently testing an instant and guaranteed pricing drayage tool.
The company has been operating for two years, largely in stealth mode, as it built out a domestic freight marketplace, including instant quoting and automated settlement, and the associated pools of supply and demand of truckload and less-than-truckload (LTL) capacity.
Coordination or commoditization?
Adding the drayage piece allows Opus9 to pull in ocean freight shippers wanting to coordinate procurement of that mode with other surface transportation legs. The ability to price drayage instantly, and with a guaranteed booking, would be unique, although it mirrors broader movement in other modes to give shippers such options. Uber Freight earlier this week announced a new direct integration with SAP that allows users of SAP’s transportation management system (TMS) to get instant pricing on loads, while ocean carrier CMA CGM is offering instant quoting as part of a larger release of electronic tools that includes a rate management solution and priority loading on its sailings.
For carriers, instant pricing offers the promise of a lower cost of sales, but it also threatens to commoditize rates. That threat might not be as menacing in drayage, where rates tend to be more standardized than in other modes.
“We are not completely open to the carrier market,” Alex Ryu, founder and CEO of Opus9, told JOC.com. “We market to them and leads regularly come through the website, but we vet them using a third-party vetting platform.” Among the elements Opus9 vets are the driver’s license, insurance, and safety rating, Ryu said, along with their preferred lanes, locations, and “willingness to use our standard workflow to make sure bidding, contract and document management, and visibility is done in an automated way.”
Opus9’s revenue, like most brokers, is derived from a margin on the rate available to the shipper, but the company has eventual plans to also offer a subscription-based software-as-a-service (SaaS) TMS “to provide another option to shippers with which they can leverage TMS function and also leverage their own carrier competition.”
The company has 650 shippers signed up on its platform and plans to release the SaaS TMS by the end of 2019.
Ryu helped build Opus9 as an independent project out under the umbrella of Korea-based maritime and logistics software giant CyberLogitec but without funding from the parent company. The concept came about as an opportunity to provide an automated environment for freight across domestic modes, as Ryu saw first hand the struggles of shippers operating without a TMS. Last year, Opus9 also nabbed Jeff Hiller, a veteran of Infor Nexus (formerly GT Nexus) and terminal operating system provider Navis, to lead product development.
“Most shippers are not using TMS, and that fact was proved from our sales experience, as none of our truckload and LTL shippers are using TMS,” Ryu said.
The idea behind Opus9 is to automate procurement and tendering through to invoice and payment. “Not all of the products can be commoditized, but we are seeing where 90 percent of an LTL shipment can be more digitized from quote to payment,” Ryu added.
Automation is the key to surviving what Ryu characterized as an intensely competitive freight technology environment. He said he wants Opus9 to be seen as “an automated marketplace platform which connects shippers and carriers in a single network.”
The lines between digital brokers and SaaS providers are blurring, particularly as newer entrants such as Opus9 compete for brand recognition among other digital brokers and low-cost and easy-to-implement SaaS TMS vendors.
“I believe the boundary will be meaningless at some point, when the freight technology brokerage product is fully commoditized with digitalization,” he said. “Then the identity of the company becomes literally a software company, not a freight company.”