The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.
By Ryan B. Schreiber
Because of the work we do at CarrierDirect, the single most common question I get is, “Where’s the industry going?” Yet, often the same companies that ask this also reject out of hand what the most innovative companies in the space are taking on. The ethos seems to be, “That’s not how it’s done here.”
The recent announcement from Redwood Logistics shows how accessible it is for companies to define their future by engaging with the simplest ideas — and yes, they may come from Silicon Valley.
Almost one year ago, after Uber announced it might be getting out of freight, I wrote an opinion piece that, for myriad reasons, suggested this move would be bad for the industry. That is not a humblebrag (maybe it’s a little bit of a humblebrag), but one of the reasons Uber’s involvement in freight was (is) important is that by extension, involvement from Uber creates the imperative to consider how to be different, not incrementally better.
So when as part of the FreightWaves LIVE @HOME event, Redwood Logistics announced its newest offering — Logistics Platform as a Service (LPaaS) — it became clear that the Silicon Valley approach is really transforming logistics.
Transportation companies broadly, and particularly logistics service providers (LSPs), have long considered how to snuggle up closer to shippers — or get “stickier” as it’s called in “The Valley.”
In a way, some might look at the LPaaS announcement as nothing new — integrate tighter and deeper into shippers’ systems to get more freight or more data or both. It looks a lot like capitalizing on a recent trend of technology companies and LSPs doubling down on integrations within existing TMS platforms, from BlueJay to MercuryGate to SAP, to get there.
In that sense, it may be true that LPaaS is not new and Redwood Logistics CEO Mark Yeager admits the same when he says, “[W]e’re reorienting our suite of services and giving a name to what we do best.”
So what? Redwood deserves credit for claiming it. Convoy has done this incredibly well. I have had myriad conversations with leaders in logistics who complain that Convoy “isn’t doing anything new,” and while I disagree that Convoy is not doing anything new, there are parts of its approach that are simply repackaging what LSPs have done for years.
What Convoy is doing that others aren’t is, as my friend Kevin Hill (FreightWaves executive publisher) calls it, “Name it and claim it.” My response in these conversations is invariable — “[Insert company being talked about] is telling the story, and you can too.”
In the sense that Redwood is taking this page out of the Silicon Valley playbook, it still deserves credit. It speaks to how the investment in our space is pushing our industry to think differently and be better.
But it isn’t entirely true that this is played out; it is new, in a sense, or at least for transportation.
Time for an unpopular opinion: Historically, transportation companies have looked to solve customer problems by solving their own problems first. It can work — look at what U.S. Xpress is doing with Variant, looking in the four walls of the building and delivering better for its clients by being better by rejecting what’s been done before.
There is nothing inherently wrong with this approach, but there are inherent risks and problems with it.
Most often, what customers want and need diverges from what vendors offer. An echo chamber is created as vendors look at other vendors to see what “they should be doing,” with each telling the story about how it is giving its customers what the customer wants. The customers, for their part, are clamoring for something different and better.
The outcome is that the industry becomes homogeneous and commoditized. How many times does a shipper have to ask what differentiates one approach from another before it becomes apparent that the solutions in the market are all the same?
That’s the story of trucking and logistics, at least since the early years of deregulation. If there were a “you are here” button on a “transportation industry map,” this is where it would be.
This is unpopular because most people who read this will shout from the rooftops that their customers are the most important thing, but that is different from developing solutions with the customer at the center — and that’s where “disruption” in logistics and other industry stems.
The clear signal from Redwood is that shippers have a problem — digital transformation of their supply chains — and that the problem is thorny. Putting its customers at the center, Redwood is able to clearly see how and why current solutions do not solve the problem. Largely for shippers, it centers around complexity, expense and risk within their technology stacks.
We see the same thing at CarrierDirect constantly — shippers have incredibly complex, expensive and interdependent technology ecosystems as compared to transportation companies. Asking a shipper to adopt or adapt is asking too much because it is too risky for a shipper’s business, with too much cost tied up in the change.
Frankly, it’s not worth it.
It is not that shippers do not care. Transportation can be the most important part of a shipper’s strategy, and yet a digital transformation would be disruptive in the more traditional sense of the word, so Redwood has gone out and created a solution for that problem in an attempt to lower the risk for its customers and yes, get stickier.
That’s different, not just better.
How much credit Redwood deserves will certainly be in the execution, as it always is. So why is this important? Precisely because we, as an industry, need to engage with these concepts instead of rejecting them as “Silicon Valley.”
This is not to say that Redwood is right, or that any other company is either. We won’t know if the solutions are the right ones for the market for some time.
But the approach is right. It’s also not to say, “You need to be developing your own LPaaS.” It is to say, engaging with the tactics, instead of rejecting them out of hand, allows every organization to find the right balance for itself in the future of how to innovate safely.
Be different, not just better.
Ryan Schreiber is director of engagement at CarrierDirect and co-founder and adviser of Kinetic, a company focused on FreightTech companies for their go-to marketing, content marketing and customer success.