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This past year would seem to indicate the growth of the freight market would continue, but things are changing. While working with shipping companies across the globe, I've noticed a shift in the tides. Instead of trying to force shippers to gain shipper-of-choice status, refusing freight when necessary, carriers are losing their power.

The warning signs of an uphill battle for carriers and truckers in 2019 are evident. The steady growth of the market in 2017 and 2018 is leveling off, and carriers are starting to panic. Shippers have control over logistics, despite the annual General Rate Increase (GRI) from earlier this month. In fact, FedEx has begun offering buyouts to U.S. workers to the tune of $575 million in order “to pare expenses amid a sudden decline in international business,” says Dom DiFurio of the Dallas News. FedEx is prepping for a slow-down, and buyouts will offer better earnings reports in 2020. 

What does it all mean for the thousands of carriers in operation today?

Owner-Operators Are Increasing in Number.

Up to 90% of carriers in the U.S. have 20 or fewer trucks. It is important to note that the prevalence of owner-operators in this group exceeds those of larger fleets in the 10-20 truck range. Pressure from the last two years along with a positive trucker marketing campaign helped to combat the capacity crunch. There were suddenly more trucks to fill the unyielding volume of e-commerce. Then, it happened:

Shipping Volume Hit a Wall.

UPS LTL workers went on strike in Q4 of last year. The strike forced shippers to reconsider logistics strategies, which they did. Then, the government shutdown began. People across the U.S. are worried about what the record-breaking event government shutdown would mean. Spending ground to a near-halt.

Even the biggest, most-promising names, such as Tesla, have faced ominous headlines as shippers retake control of the industry. Forbes recently ran an article, entitled, “Tesla's Profit Warning Is Further Evidence That Elon Musk's Math Does Not Add Up.” The article touches on Tesla’s commitment to future growth while layoffs continue. As per-car sale profits decline, truckers moving Tesla vehicles will see less demand, putting power back in the hands of shippers, not just carriers and truckers. 

Technology Advancements Streamlined Transportation Management

Technology eliminates inefficient roles and processes. It is supposed to make life easier. In transportation management, technology reduces back-office paperwork, increases route planning and accuracy in billing, and enables automated reordering, load planning and more. Everything has moved in the direction of automation for faster and easier management, and the change in shipping volume created a vacuum.

The vacuum exists where years of preplanning for higher capacity demand stoked fears over the inability to get all freight shipped on time and without added costs. The hours of preparation have come to fruition. Shippers now have options for freight, even abandoning some freight allocated to the Big Three carriers, spurring FedEx’s latest move. Now, technology is moving forward again with blockchain-based freight management.

Blockchain Will Empower Truckers and Carriers With Meaningful, Actionable Data

Blockchain's most significant benefits are felt where manual and digital processes have grown susceptible to corruption. Errors in billing, HOS tracking, payment processing, logging miles—processes forced into the digital age with the ELD mandate—forced truckers to rethink their strategies. Shipping has changed. Today it is much more than just moving freight from A to B; it includes and requires a mountain of data-driven recordkeeping.

Blockchain offers a solution to bridge existing data silos and track data without the risk of accidental or intentional corruption, editing or deletion providing truckers the ability to prove billing and route details. When I recently sat down with Dave Nemo of the Road Dog Trucking Shows on Sirius XM Radio, I emphasized the role that blockchain plays in streamlining recordkeeping. Recordkeeping is the hardest and most tasking part of being a trucker. Truckers drive, and since self-driving trucks aren't here just yet, they still need to find time to handle paperwork. That's where blockchain becomes an easy investment choice.

Continued Development of Blockchain Will Offer End-to-End Visibility for Shippers and Value-Added Services

Blockchain will offer shippers more confidence to know exactly where their shipments are at all times. Shippers can opt to receive automated alerts for unexpected delays, real-time information about shipment status, and data on what changes or issues may affect cargo insurance claims or delivery windows. Shippers use this information in yard management, reducing delays and moving freight. At the same time, smart contracts and blockchain-based payments will eliminate uncertainty over ACH payments. Blockchain offer validation of freight authenticity and protection of perishable, high-cost products—key features that shippers will consider in working with carriers and truckers. Meanwhile, analytics can further ensure accurate forecasting and planning in supply chain functions.

Carrier of Choice Is the New Normal

I understand the market could quickly take an upswing. E-commerce demand could surge, and the notion of the carrier-of-choice could turn back toward shipper-of-choice status. However, blockchain can benefit both, enabling carriers and shippers to achieve the status most desirable for the current market. Shippers have control today. Carriers could have it tomorrow. Both will benefit from leveraging blockchain now.

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John Monarch

John Monarch is the CEO and co-founder of ShipChain the blockchain startup focused on the freight and logistics industry. He is a serial entrepreneur with multiple previous ventures, with a background in physics and computer science.

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