This week Chicago-based Edge Logistics launched its digital freight-matching platform Capacity, a web portal that makes the brokerage's private load board transparent to carriers and allows them to bid on and book loads.
Capacity is unusual because Edge is a fairly small freight brokerage with $49 million in gross revenue in 2019. The majority of digital platforms and mobile apps have been built by the upper tier of 3PLs — names like C.H. Robinson, Coyote, TQL and Echo.
If Capacity takes off — and the early data suggests that it will, with more than 500 carrier accounts created already — it will be a powerful demonstration of how cloud computing and near-shored software engineers have democratized access to technology for small businesses. Edge used Lean Tech, the Medellín, Colombia-based logistics tech firm, in collaboration with its own developers, to build the site's infrastructure in a cost-controlled process.
Capacity features an attractive interface and is designed to be easy to use to build preferred lanes, search for freight and make counteroffers on loads.
Edge President William Kerr said the popular notion of carrier "app fatigue" has been promulgated by large 3PLs and that his team's market research found that most carriers are set up to work with 30 to 50 brokerages but get 90% of their freight from their top five brokers.
Edge's goal is to be one of those top five partners for its carriers, Kerr said.
"In terms of having enough liquidity to sustain a marketplace, yes, we do," Kerr added. "We are launching this product with major contracts in hand from some of America's largest shippers who also believe in this vision. Capacity allows us to get our best loads in front of our best carriers first, which allows us to do much more business per person. We project that with Capacity live in the open market, we are going to be able to deliver $2 million in freight revenue per employee in 2020."
Edge realized that transparency was in the best interests of all its stakeholders — shippers and carriers — and that building its own technology was the best way to efficiently deliver what its customers and carriers wanted.
"Customers want best-in-class pricing, real-time visibility, excellence in overcoming obstacles/issue resolution and high-quality drivers and equipment," Kerr said. "They want the same carriers hauling the same loads over and over, and they want all the data in their system in real time. We have been doing the beta testing for a few months now, and carrier participation has been outstanding."
Virtual dedicated capacity is the gold standard of services offered by 3PLs, and Edge's Capacity platform allows carriers and shippers to build those relationships directly. In the My Drivers section, carriers can offer recurring capacity to match with future loads from shippers with regular lanes on an ongoing basis.
"The launch version of My Drivers is far more user friendly and leads to greater matching success, getting those high-probability matches offered in seconds versus minutes," Kerr said.
Kerr believes that Capacity will allow Edge to build deeper and stickier relationships with carriers. The transparent marketplace should build trust around individual loads and rates while also putting them in the context of the big picture, Kerr explained, so that partnerships can be about more than today's load for today's truck.
"There has never been a greater need than right now for a broker to manage the relationship between the national footprint shipper and the family-owned, regionally operating, well-established trucking company," Kerr said.
Edge is already thinking about Capacity version 2.0. Not only will its matching algorithms get smarter the more daily active users are in the platform, but Edge wants to expand the functionality so that carriers can participate in RFPs in Edge's shipper network.
"We think this can give regionally operating carriers the ability to win those one or two lanes they really need to complete their triangle from a major shipper and get the density and consistency they need to keep their trucks moving, without making any of the contractual promises that corporate America is demanding from their carrier base from a size, financial strength, technology and insurance compliance perspective," Kerr said.