Freight brokerage is ripe for disruption, write Dr. Walter Rentzsch and Dr. Wilfried Aulbur
The disruption of digital platforms in brokerage-based businesses is just one of the many ways our world is increasingly becoming digitised.
Special report: Can the Uber model transform freight?
Take the travel agency business as an example. Until the late 1990s, travel agencies dominated the market for travel bookings. The arrival of the internet enabled customers to book their vacation without going through an agency. The simplicity and cost savings of this model motivated customers to use online platforms. Penetration grew continuously despite initial adoption hurdles for some customer groups. Today most standard trips are booked online, and the number of travel agencies has declined by a third over the last decade.
The logistics industry is another brokerage-based business that is beginning to see the underpinnings of a similar disruption. Truck freight start-up funding has grown over past years. While start-ups have raised about US$180m in VC funding between 2011 and 2016, the last few years saw investment increase to US$470m. A large number of new players emerged, some of which reached unicorn status with valuations over one billion dollars, such as Convoy or Flexport. To understand where these companies play, a closer look at the US trucking market structure is necessary.