- Oracle announced on Thursday that it’s partnering with Loadsmart, a digital freight-brokerage, to ensure Fortune 500 companies like Kraft-Heinz and Coca-Cola can quickly match their loads with truckers.
- Oracle has been involved in logistics for 15 years, and Derek Gittoes, vice president of supply chain management product strategy at the company, told Business Insider that parts of the trucking industry are “antiquated” and ripe for digitization.
- Companies like Amazon and Uber have leaned into modernizing the trucking sector by way of investments in the digital freight-brokerage industry.
- Visit Business Insider’s homepage for more stories.
One of the fastest-growing parts of the American trucking sector solves a problem you wouldn’t think exists in an $800 billion industry — matching retailers and manufacturers with truck drivers without picking up a phone or sending a fax.
Digital freight brokerage, as that sector is called, seeks to lessen the need for a middle-man when companies are trying to move their goods. Companies like Amazon and Uber have opened digital freight-brokerage departments, while trendy startups like Convoy and Transfix are attracting hundreds of millions of dollars in investments and big-name hires as they seek to digitize trucking.
“Over the past few years, we have seen a large uptick in the amount of venture capital investments entering the trucking market,” a July 10 Goldman Sachs transportation report said.
And now, Oracle is the latest big-name tech company that’s betting on matching companies with truckers.
The $39 billion cloud-computing giant announced on Thursday that it is partnering with Loadsmart, a digital freight broker, to ensure its customers can quickly match their loads with truckers.
Oracle has been involved with logistics for around 15 years, through services like the Oracle Logistics Cloud. That product, whose customers include Fortune 500 names like Kraft-Heinz and Coca-Cola, helps companies oversee their supply chains from the warehouse to the store or customer’s home.
Derek Gittoes, vice president of supply chain management product strategy at Oracle, said the Oracle Logistics Cloud also helps companies understand the most cost-efficient way to ship goods — what size box, which trucking company to use, and so on — and how to execute on that.
But until this partnership with Loadsmart, Oracle’s customers weren’t able to book loads without calling or sending an email — the way that companies have been finding truck drivers to move their goods for decades.
“Instead of having to call or email to see what that cost would be or go to a website and look it up, they can see that information within their Oracle transportation product,” Gittoes told Business Insider. “We want to make that as easy as possible by building out these integrations.”
Finding a truck driver isn’t as seamless as you might think
Finding a truck driver to move goods is especially cumbersome in the highly fragmented trucking industry. According to Goldman Sachs, over 90% of trucking companies have 10 trucks or fewer. “Brokers solve for this by managing carrier relationships on behalf of the shippers,” Goldman Sachs said.
And now, as more truck drivers have mobile devices where they can download apps like Uber Freight, tech companies are able to access these drivers directly — without going through traditional brokers.
“People are realizing just how big the transportation market is and, in some ways, how antiquated some of the technologies are for solving certain issues,” Gittoes said. “Lots of smart people — who have seen other sorts of transportation-related segments like personal transportation — are saying, ‘Hey, there must be an opportunity.’ So, I think that’s what’s attracting it. It’s the size of the market and the potential for disrupting this very, very old model of work.”
Digital brokers aren’t just good for the companies that develop those apps — truckers can benefit as well. Convoy’s latest feature, which uses automation to bundle routes together so drivers don’t have to drive empty miles getting from one job to the next, addresses a major problem for America’s 1.8 milion truck drivers.
Drew McElroy, CEO and cofounder of Transfix, said the traditional process of brokering a load through phone or fax can take hours. But apps like Transfix need 30 minutes or less to execute the same process.
“If you can get more intelligent about execution, you create a situation that’s a win-win for everybody,” McElroy previously told Business Insider. “You create value simply by eliminating waste.”
NOW WATCH: Will Boeing recover from the 737 Max crisis?