Cargologis

What Is a Freight Exchange?

To haulage companies, freight providers and transport companies, freight exchange is not an entirely new term. However, for most people, the term cannot ring a bell.

Over the years, there have been a couple of ways that have been used in the transportation of goods. Thanks to new management systems, this has become much easier. Freight exchange has become a great revolution to this business.

Freight exchange simply refers to a way of transporting goods that allows haulage companies to fill empty vehicles on their return journeys. Before freight exchange, vehicles going back to their depots after delivery of goods would make the return trip when empty. Because of this, haulage companies incurred a lot of expenses as the service was inefficient.

Example of online freight exchanges:

Platform Website Regions Covered
EUlogis www.eulogis.com Europe (UE, EEA), Russia, Turkey
LogisBoard www.logisboard.com Americas (North America, Central America, South America)

How Does Freight Exchange Work?

During its early years, freight exchange was done purely by word of mouth. Thanks to the inclusion of software and advancement of logistics, it is now an online service.

There are various freight exchange platforms. Through these platforms, haulage companies are able to search through a database of available goods that need to be delivered. They are also able to advertise the capacity of their vehicles.

Freight exchange platforms also allow logistics providers and freight forwarders to advertise their goods. They also get the opportunity to determine whether their freight loads match with the available vehicle capacity.

Another major importance of the freight exchange platforms is that it allows the carriers to communicate to fellow operators. They usually convey information on the freight traffic to transporters and forwarders.

Simply put, freight exchange platforms are the way through which transporters, forwarders, and logistics to communicate. On the platform's database, transporters are able to see all the freight that needs to be transported. Forwarders advertise their freight while carriers give information on the freight traffic.

Thanks to the advancing technology, the freight exchange is being made more efficient. This is through the integration of telematics and transport management systems. This integration allows the use of GPS technology to match freight load as well as track it through the process of delivery.

Freight Exchange vs. Third Party Logistics

When considering ways of transporting their freight, transporters usually have a hard time deciding between freight exchange and third-party logistics (3PL). 3PL basically works in the same way. However, a major difference between the two is that while freight exchange is purely online, 3PL relies on human interaction.

Another major difference between the two is the way through which they make money. In freight exchange, the platforms make money through subscription. Transporters, logistics, and carriers have to subscribe and pay a fee. Additionally, the platform charges a fee for advertising and consulting on freight information.

3PL adds a markup to the shipment cost charged by the carrier. The markup is usually a percentage of the shipment cost and the shipper receives it as a lump sum.

When deciding on whether to use freight exchange or 3PL, the decision ultimately depends on what kind of shipment you have.