"Product Freight" is Different than "People Freight", yet Marketers Treat the Same?
If your email box is anything like mine it is getting populated with 3 to 5 emails a week from various freight companies telling us how easy it would be to sign up on their website to begin receiving competitive freight quotes at a press of a button, while also making track & trace a breeze.
From my perspective, these marketing emails hurt our industry by perpetuating the thinking that freight is a commodity buy. It gives the impression that "product freight" is exactly like "people freight", so come along and book your next shipment with Freightpedia.com or Freightocity. At one point in my career, I even had a boss and well known advocate for the logistics industry tell me we should sell by explaining to potential clients that we are travel agents for freight. By the close of this blog, you'll have not doubt what I said.
Over-the-road trucking, intermodal, LTL, etc. is significantly different than buying an airline ticket. I'm not here to take anything away from airlines. Airlines do an amazing job providing a high level of value and service for their customers, but to compare "people freight" to "product freight" misses the mark.
To illustrate my point, I'll walk you through three variables: service provider count, total number of origin and destination combinations and routings for both the airline and trucking industries.
To start, let us take a deeper dive starting with the airline business. Remember, I'm not here to take anything away from the airlines, but to look at what it means to provide a web portal to price and service. To continue from that perspective, I took a look on one of the travel websites to see what the airlines offered in the CHI to LA and NY to LA lanes. What I found were seven airlines delivering 80 flights of people throughout any given day. In the search, I also found less than 75 major commercial airline hubs serving the United States.
Moving "people freight" from point A to point B is complicated and sophisticated, but "people freight" drives to the origin location and the flight delivers the "people freight" to a destination location in a city. If "people freight" has an issue in being ready, then the delivery to the destination never occurs for them, as the flight does not wait or change its schedule because the "people freight" still had time to pick and pack its suitcase or had problems with traffic. The flight will stay to its routing whether the "people freight" arrives and unless the freight has travel insurance has to pay no matter if on the flight or not.
Now let us talk a bit about "product freight". There are literally millions of origin / destination combinations, as the truck has to pick-up and deliver its freight to a unique address. Just think of all the businesses a freight provider has to service in a major city, let alone in small to medium cities. Let's just say it is more than one. Even in the situations where there is a consolidation or pool point, the freight is still having to be picked up at origin and delivered to a destination. The number of combinations grow exponentially when adding in freight mode and carrier mix available. Just think, there are 1.2 million trucking companies that operate in the USA. Roughly 97% of these companies operate with twenty (20) or fewer, while 90% operate six (6) or fewer trucks. The latter two facts take the combinations to a level of difficulty that is mind numbing when thinking how to tap into each of the providers electronically over a website. Add in the level of IT sophistication within the smaller carriers takes the level of difficulty up even further. Today, there is no economically feasible way to link into all 1.2 million carriers themselves, let alone find their capacity for a given day on the millions of O/D pairs.
The "billions and billions" of combinations now in the forefront of our minds takes us to the pick-up, transit and delivery of "product freight". On the pick-up and delivery, the freight industry is already assuming a 2 hour window of free time before the detention charges begin to start. Again, image an air pilot waiting for a passenger to pick-and-pack their cloths into the suitcase and then arrive 2 hours late and what it would do to the airline hub and spoke networks. No wonder "truck pilots" get a bit wound up when they have to wait.
We could continue, but I think you get my point of complexity is exponentially more difficult to run through a web portal for freight than an airline ticket and to market that a single portal exists to tap into all the combinations is ... well ... not serving the shipping community well. We will go into more detail on how and why some logistics companies have gotten here and how this customer acquisition strategy is causing shippers to pay more and receive a lower level of service.
Until then, to stay in front of the key topics in logistics and learn more how InTek Freight & Logistics can help, visit us at www.intekfreight-logistics.com and consider following our weekly blogs or postings on LinkedIn.