An essential tool for road freight transport (RFT), the freight exchange helps both shippers and carriers. It is a virtual platform for connecting shippers and carriers. The goal is to clear freight while optimising the trailer fill rate, as well as trips with fewer empty kilometres. According to Eurostat, 15 to 30% of truck journeys are made empty. The digitalisation of freight transport, via tools such as a TMS, freight exchanges and marketplaces, optimises operations and improves the efficiency of supply chains. In order to define a freight exchange, it is necessary to emphasise the ambivalent nature of this system, since it deals with both transport orders issued by shippers and invoicing by carriers. We explain everything about the limitations of freight exchanges and the alternative that can optimise the transport activity of your supply chain.
The freight exchange is used within the framework of RFT. Intended for transport players, it comes in the form of an online platform. It serves to connect shippers who want to clear their freight, with carriers who are looking for freight to fill their trailers. Each of them sees the other as a solution to their problem. It is also a way to negotiate prices, as freight exchanges offer you the freedom to set your own rates.
Here's how a freight exchange works:
There are many freight exchanges. The most commonly used are Teleroute (general, for domestic and international), B2P Web (more domestically oriented, with 90% of French carriers) and Timocom (resolutely internationally oriented, especially for Eastern European countries). Before choosing the ones you want to work with, you will need to consider several criteria.
If you are a shipper offering freight, you can expect:
If you are a carrier, then you will find:
Subscribing to a freight exchange is not free. The platform is paid for by a subscription taken out by both shippers and carriers. This subscription gives them access to freight offers and vehicles in order to find a partner, but also to the services offered by the exchange in question. The subscription amount varies depending on the size of the vehicle fleet and the volume of offers to be placed.
The connection between shippers and carriers is sometimes confined exclusively to the platform. It can become difficult to establish a lasting business relationship without real direct contact. On some platforms, relationships are conducted by phone or email, requiring parties to initiate queries manually.
Each party relies on freight exchanges to solve its individual problem. Shippers must clear the cargo, while carriers must fill their trucks. Unfortunately, freight exchanges do not guarantee that the freight will find a carrier or that the carrier will make a decent profit on it. Freight offers can remain on the exchanges for several days, while carriers sometimes have to wait a long time before they can move their vehicles once they are finally full.
Some freight exchanges do not adequately verify the reliability of the carriers listed. There is always the risk that some carriers will use the exchanges to take freight and then resell it to other carriers to pocket a commission. This is called cascade chartering, which is not illegal, but it is not very reassuring for the shipper who does not know who will ultimately take charge of the freight. Feedback becomes very complicated in this case, as does the rather unprofessional communication with the customer. Furthermore, having multiple service providers ends up diluting liability in the event of a dispute.
Freight offers flood onto the exchanges, and some of them attract an influx of carriers who will seek to corner the market. This increased competition has the effect of driving prices down and therefore reducing carriers' margins.
Freight exchanges involve some tasks that can be difficult to manage. It is a question of administrative and financial constraints. Billing tracking can become problematic, especially in the case of cascade chartering. Transport documents can sometimes take a long time to be transmitted, delaying payment for the service.
Alternatives to freight exchanges include marketplaces. These also connect shippers with carriers, but they have many advantages and better meet the current expectations of RFT players.
Marketplaces operate similarly to traditional freight exchanges. Shippers or charterers place their freight offers, and carriers offer their vehicles and submit proposals to the shippers. Their strength lies in the multitude of features. These new platforms offer services for managing transport flows, tracking goods and invoicing. Let’s take the example of Upply, a marketplace connecting shippers and carriers.
As you can see, freight transport exchanges offer numerous opportunities to RFT players. However, new methods such as marketplaces are better suited to the practices of companies which tend towards digitalisation and security of transactions. The Upply Connect service perfectly overcomes the limitations mentioned above with, in addition, significant competitive advantages compared to a traditional freight exchange.