The business consulting firm Frost & Sullivan released the results of its new study of trucking-as-a-service (TaaS) and digital freight brokerage this week. From an estimated current size of $11.2 billion, Frost & Sullivan expects TaaS to grow to $79.4 billion by 2025. Digital freight brokerage will account for the lion’s share of this market—Frost & Sullivan said that segment had 2025 potential revenues of $54.2 billion. Telematics is projected to triple, from 25.7 million devices in 2018 to more than 73.1 million in 2025.
According to a September 2018 report by Goldman Sachs transportation equities analyst Matt Reustle, third-party logistics providers (3PLs) and freight brokerages handle 23% of all loads moved in the United States, a share that has grown 5x since 2000.
“New entrants (Convoy, Uber Freight, uShip) are trying to gain market share by offering price transparency, online load boards, and freight marketplaces (akin to shopping for a flight on Expedia) for booking freight all via mobile applications, with the goal of disintermediating human interaction in the freight booking and payment process,” Reustle wrote.
FreightWaves estimates that the two leading ‘pure’ digital freight brokerages, Convoy and Uber Freight, are on a combined $1.3 billion revenue run rate. Incumbent technology platforms such as C.H. Robinson’s (NASDAQ: CHRW) Navisphere and J.B. Hunt’s (NASDAQ: JBHT) Carrier 360 are also highly automated and handle billions of dollars worth of freight.
Neither Convoy nor Uber Freight yet possesses even 1% market share of the truckload brokerage industry, and more than 60% of industry is composed of relatively small players, presenting an opportunity for technology disruption and consolidation that has been catnip for venture capitalists, who poured nearly $3 billion dollars into freight tech companies last year.
“Lack of instant load and rate visibility, frequently delayed payments and operating cash crunches are creating a huge market for digital brokerage solutions, as in the very least they enable faster brokerage, instant electronic upload of proof of delivery as well as electronic payment terms,” said Silpa Paul, Frost & Sullivan’s Industry Analyst, Mobility.