Tobias said the online auction allows him to operate virtually anywhere, although most of his business comes from buyers at auction sites operated by Ritchie Bros. Auctioneers in the United States and Canada.
“It took a couple months to get the first load,” Tobias said. “But once you get a load and you get feedback from shippers, you are seen as legitimate, and it snowballs and it has just gotten bigger and bigger.”
Ritchie Bros. officials said 43% of the bidders at its industrial auctions signed up to use uShip’s online freight exchange in 2010.
Matt Chasen founded uShip in 2004 with two classmates from the University of Texas as a way to help consumers and other unsophisticated shippers find carriers with unused hauling capacity to move personal items such as antique dressers, boats and motorcycles.
The Austin, Texas-based company has attracted $200 million in transactions and 1 million customers and operates in North America, Europe and Australia.
In April, the company announced the hiring of Charles Myers, a former executive with freight load board Getloaded.com, to expand use of the online freight auction by freight brokers and logistics companies. The company also plans to offer private network exchanges.
Unlike load boards that simply match freight with carriers, transactions on uShip are completed online.
“It’s a transactional marketplace,” Chasen said. “Shippers and service providers agree on terms on the site.”
Scott Bawcom, owner of Dream Time Transportation in Nashville, Tenn., said he gets 65% of his boat- and vehicle-hauling business through uShip and sees the site’s free listing and customer reviews as a valuable marketing tool.
“We have over 150 people on uShip saying we do a terrific job,” he said. “Without those testimonials, we’d have probably lost 10% to 15% of that business.”
While the popularity of online exchanges has inspired several other start-ups, including GR8FR8 Inc., ShipAlmostAnything.com and eBuyFreight.com, one carrier sales executive said the potential of Web-based exchanges is limited.
“I believe it can only go so far,” said Corey Tyler, senior director of transportation for Menlo Worldwide Logistics, a unit of Con-way Inc., San Mateo, Calif.
“You are buying a service,” Tyler said. “Carrier A is 80% on-time and carrier B is 98% on-time, but online they are looked upon as equals. That’s where the online market struggles.”
Still, the number of online freight applications is growing.
Aljex Software, Middlesex, N.J., recently partnered with iContainers.com to offer brokers, carriers and logistics companies the ability to price, schedule pickup and arrange documentation of containerized shipments anywhere in the world.
Another company, Unishippers Global Logistics, Richmond, Va., operates a network of local shipping “resellers” that use software to help small and midsize businesses select the best shipping options based on cost, carrier or scheduling.
“Unishippers is a lot like Travelocity.com, but for shipping,” said Dan Lockwood, president.
By leveraging the combined shipping volume of all its customers, the company gets discounted rates from carriers, resulting in lower shipping costs.
Trucking officials warn that using the Internet and transportation management system software to make frequent changes to their carrier network can be problematic.
“A loss of volume will often negatively impact a carrier’s cost structure, so it can mean higher rates for shippers,” said Keith Huggins, a regional vice president at Southeastern Freight Lines in Lexington, S.C.
Huggins said Southeastern maintains a sales staff of about 160 people to call on shippers, but the company also works with third-party logistics firms and, at times, uses online freight auctions to secure freight.
“Without question, 3PLs have completely changed the decision tree,” Huggins said. “They represent us in the marketplace. It’s a reality.”
Huggins said many of Southeastern’s customers are beginning to outsource transportation management rather than keep traffic managers on staff.
“It’s more economical for them to reduce full-time staff and hire a 3PL,” he said.
In response to this shift in the market, such companies as Chicago-based Echo Global Logistics and C.H. Robinson Worldwide in Eden Prairie, Minn., have established business units to provide transportation management system (TMS) software as a service over the Internet.
“A lot of folks think they have only two choices — buy software or outsource to a 3PL,” said Jordan Kass, executive director of C.H. Robinson’s Truck Management Center, or TMC. “There are not only two options out there.”
Another option, called managed TMS, allows shippers to retain control over carrier selection and overall strategy while using third parties such as TMC to execute day-to-day shipping transactions and to monitor carrier performance.
“We are an extension of shipper’s staff,” Kass said.
Echo President Douglas Waggoner said brokerage and logistics firms are in a better position to help shippers because, unlike carriers, they don’t have to worry about filling certain trucks with freight.
“We do business with about 7,000 carriers,” Waggoner said. “We provide one point of access for reporting and analysis of freight services.”
Brokers that have good relationships with carriers can help shippers withstand a shortage of freight hauling capacity, said Joseph Tutino, vice president of sales for Network F.O.B., a company based in Naples, Fla., that provides administrative support for about 150 brokerage agents across the country.
“Truckers are going to demand and get more for their services,” Tutino said. “If you don’t have back-up relationships for your shipping lanes, you could be out of luck.”
In an effort to attract and retain sales agents for its business, Network F.O.B. recently boosted the commission rate it pays its best-performing sales agents from 70% to up to 80%.
Scott Ramey, an independent sales agent who works from homes in Hartford City, Ind., and Clermont, Fla., said the changing business environment will test the ability of agents to provide value to shippers and carriers.
“Freight is a commodity,” Ramey said. “The difference maker is the relationship.”
Ramey represents shippers moving everything from peanuts and ice cream to parts for recreational vehicles and container loads going from Northwest Indiana to Sweden.
“If you have a load going to California and you need it picked up at 4 p.m. and you call me, you know it’s going to get done,” Ramey said. “Give it to someone you don’t know, especially now with demand outstripping supply, you can get a call back that the carrier has found a load that pays more and has left your load behind.”
Unlike brokerage and logistics companies that are paid by the shipper and are responsible for paying carriers, sales agents such as Ramey are paid a commission by carriers for each shipment they arrange.
With the average cost of a company sales representative well over $100,000 a year for salary, a car and travel expenses, Ramey said paying an agent a percentage on each load means expenses are “variable” and therefore are more manageable for many small and mid-sized freight carriers.
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