Tom McLeod: We’re Building Digital Freight Brokerage
Technology BY JOHN PAUL HAMPSTED, ASSOCIATE EDITOR OF
FREIGHTWAVES.COM
This article originally appeared on
www.freightwaves.com, and is re-used by permission.
On Monday morning, August 26, Tom McLeod, president of McLeod Software, opened the company’s 2019 User Conference at the Gaylord Rockies in Aurora, Colorado, with prepared remarks.
While McLeod’s talk was ostensibly an overview of the company’s current projects and new offerings, the subtext was that McLeod Software has technology for freight brokerage every bit as advanced and automated as newer digital entrants — and it almost certainly has better data.
McLeod began by noting the diversity of his company’s customers and suppliers and said that McLeod Software was committed to giving them the tools they needed to be successful. He also pointed out the diverse financial and operating results reported by publicly-traded transportation companies for the second quarter. Some companies grew topline while profits shrunk, while other companies did the opposite.
“That means it’s not just the economy,” McLeod said. “Freight patterns are changing — the tectonic plates we rest on are shifting. Things are changing, and change represents opportunity.”
“Change can mean growth and opportunity for your business if you’re prepared,” McLeod continued, “so control what you can control. Set your sails according to which way the wind is blowing so that you can make progress and be better than the competition.”
42 A C HIEVE MORE
The theme of this year’s conference is ‘The Transformation of Trucking.’ Much of McLeod’s presentation concerned the advanced technologies McLeod is building to help its customers thrive in an era that has seen the emergence of powerful digital freight brokerages backed by venture capital and private equity. McLeod said that while the fairly slow growth of the current economic recovery seems to have prevented the formation of large asset bubbles, private equity could be in a bubble created by a decade of cheap leverage.
“Be careful, and choose your partners wisely,” McLeod warned.
McLeod spent some time discussing the distinctions between artificial intelligence, machine learning, and deep learning before saying that the two primary areas where McLeod Software is applying those techniques are pricing decisions and load matching. As digital freight brokerages have discovered, other tasks like exception management still require the creativity and problem- solving abilities of human brokers.
I thought McLeod made a useful distinction between automated pricing for contract freight in response to requests for proposals (RFPs) and real-time market-based pricing for spot freight. So far, digital freight brokerages like Convoy and Uber Freight have integrated their pricing tools into transportation management systems like BluJay and MercuryGate, giving shippers visibility into current market conditions.
But a much more complex task is to automate the complicated bids for freight on multiple lanes over a long period of time — up to one year and longer. FreightWaves has heard anecdotally and found through survey data that the cadence of RFPs has accelerated, with contract freight being marked to market more frequently, and mini-bids on lanes becoming more common.
For smaller, relatively unsophisticated freight brokerages, keeping up with the pace of irregular bid cycles is labor- intensive and unrewarding: as competition intensifies, brokers report being awarded a lower percentage of the
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