Viewpoint: How Silicon Valley Is Transforming The Freight Industry

The opinions expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.

By Ryan B. Schreiber

Due to the work we do at CarrierDirect, the most common question I get is, “Where is the industry going?” Yet often the same companies that ask for it also outright reject what the most innovative companies in the industry are doing. The ethos seems to be: “This is not how it is done here. ”

Redwood Logistics’ recent announcement shows how accessible it is for businesses to define their future by engaging with the simplest ideas – and yes, they can come from Silicon Valley.

Almost a year ago, after Uber announced it might be pulling back from freight, I wrote an opinion piece that, for a myriad of reasons, suggested that this move would be bad for industry. It’s not a humblebrag (maybe a little humblebrag), but one of the reasons Uber’s involvement in freight was (is) important is that by extension Uber’s involvement creates the imperative to consider how to be different, not gradually. better.

So, as part of the FreightWaves LIVE @HOME event, Announcement of Redwood Logistics its latest offering – Logistics Platform as a Service (LPaaS) – it has become clear that the Silicon Valley approach is truly transforming logistics.

Transportation companies in general, and logistics service providers (LSPs) in particular, have long been thinking about how to snuggle up closer to shippers – or get more ‘clingy’ as it’s called in ‘The Valley’ .

In a way, some might view the LPaaS announcement as nothing new – integrating shipper systems more and more tightly to get more freight or more data, or both. It sounds a lot like capitalizing on a recent trend for tech companies and LSPs to double integrations within existing TMS platforms, from BlueJay to MercuryGate to SAP, to make it happen.

In that sense, it may be true that LPaaS is nothing new and Redwood Logistics CEO Mark Yeager admits the same when he says, “[W]We are reorienting our range of services and giving a name to what we do best. “

So what? Redwood deserves credit for claiming it. Convoy did this incredibly well. I have had a myriad of conversations with logistics managers complaining that Convoy is “not doing anything new”, and although I disagree that Convoy is not doing anything whatever Again, there are parts of his approach that just repackage what LSPs have been doing for years.

What Convoy does that others don’t is, as my friend Kevin Hill (FreightWaves executive editor) calls it, “Name it and Claim it.” My response in these conversations is invariable – “[Insert company being talked about] tells the story, and you can too. ”

In the sense that Redwood is pulling this page out of the Silicon Valley playbook, it still deserves to be saluted. It shows how investing in our space is pushing our industry to think differently and be better.

But it is not entirely true that this is playing out; it’s new, in a sense, or at least for transportation.

It’s time for an unpopular opinion: Historically, transportation companies have sought to solve customer problems by solving their own problems first. It can work – look at what US Xpress is doing with Variant, looking inside the four walls of the building and providing better for its customers by being better by rejecting what has been done before.

There is nothing inherently wrong with this approach, but it does come with inherent risks and problems.

More often than not, what customers want and need differs from what the suppliers offer. An echo chamber is created when vendors look at other vendors to see what they “should be doing,” each telling how they are giving their customers what the customer wants. Customers, on the other hand, are asking for something different and better.

The result is that the industry becomes homogeneous and trivialized. How many times does a shipper have to wonder what makes one approach different from another before it becomes clear that the solutions in the market are all the same?

This is the history of trucking and logistics, at least since the early years of deregulation. If there was a “you are here” button on a “transportation industry map”, this is where it would be.

This is unpopular because most people reading this will be screaming from the rooftops that their customers are the most important thing, but this is different from developing solutions with the customer at the center – and this is where the “disruption” stems from. »Logistics and other sectors.

Redwood’s clear signal is that shippers have a problem – the digital transformation of their supply chains – and the problem is thorny. By putting its customers at the center, Redwood is able to clearly see how and why the current solutions do not solve the problem. Primarily for shippers, it focuses on the complexity, expense, and risk within their technology stacks.

We see the same thing over and over again at CarrierDirect: Shippers have incredibly complex, expensive, and interdependent technology ecosystems compared to transport companies. Asking a shipper to adopt or adapt is asking too much because it is too risky for a shipper’s business, with too many costs associated with the change.

Frankly, it’s not worth it.

It’s not that shippers don’t care. Transportation may be the most important part of a shipper’s strategy, and yet a digital transformation would be disruptive in the more traditional sense, so Redwood came out and created a solution to this problem in an attempt to reduce the burden. risk to his clients and yes, get stickier.

It’s different, not just better.

The credit Redwood deserves will certainly be in the execution, as always. So why is this important? Precisely because we, as an industry, need to engage with these concepts instead of dismissing them as “Silicon Valley”.

That’s not to say Redwood is right, and neither is any other company. We won’t know if the solutions are right for the market for some time.

But the approach is correct. It also doesn’t mean, “You have to develop your own LPaaS.” That is, engaging in tactics, instead of rejecting them out of hand, allows each organization to strike the right balance for itself in the future on how to innovate safely. .

Be different, not just better.

Ryan Schreiber is Director of Engagement at CarrierDirect and Co-Founder and Advisor of Kinetic, a company focused on FreightTech companies for their referral marketing, content marketing and customer success.

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