On Nov. 13, C.H. Robinson (NASDAQ: CHRW) unveiled Freightquote by C.H. Robinson, a new web portal offering multimodal transportation solutions to small and medium-sized businesses (SMBs) so they can easily source reliable capacity at a reasonable cost.
Freightquote by C.H. Robinson is based on Freightquote, a technology company Robinson acquired in 2015; the product went through several beta tests and was scaled over the past few months.
Since the end of 2018, a glut of capacity in the trucking industry and well-funded newer entrants helped contribute to a crash in trucking spot rates; contract prices are still declining. Carriers and third-party logistics providers (3PLs) have entered into a fierce price-based competition for Fortune 500 freight, but smaller shippers have been overlooked and underserved.
In an interview with FreightWaves, C.H. Robinson President and CEO Bob Biesterfeld said that while Robinson now works with about 100,000 SMB shippers, the total opportunity in the segment is 1.8 million to 1.9 million shippers spending more than $70 billion on transportation annually.
The bet is that by combining Robinson's extensive network of decentralized branch offices with leading technology built specifically for SMBs, Robinson can onboard new customers efficiently and largely automate their freight movements.
"SMBs are difficult to serve appropriately in the traditional brokerage model," Biesterfeld explained, but Freightquote provides a "fully automated platform for them to join and allows customers to harness the information advantage of Robinson, giving them access to the [less-than-truckload] and truckload pricing and capacity Robinson has been able to gain."
Biesterfeld said many smaller shippers do not use transportation management systems or have the ability to connect with application programming interfaces (APIs). By offering a portal like Freightquote, Robinson can let its customers connect to a tech-enabled freight platform without building out their own technology stack.
Shippers can use Freightquote by C.H. Robinson to instantly compare rates from vetted carriers, book freight, track their load, receive notifications, and pay with a credit card.
"We love the way it guides customers through the process of shipping through multiple modes," Biesterfeld said. "Freightquote is a new way for us to be able to do it, one that's more conducive to how people buy things today. We're trying to get more user-centric in how we design software, and SMBs are very different from large enterprise customers."
Smaller shippers typically have a weaker grasp of freight markets and don't fully understand the price breaks between modes like LTL, volume LTL and full truckload. Web portals designed for that segment add value through ease of use and by bringing transparency to pricing in a mode-agnostic platform.
"It's a really targeted product — we're not trying to make Freightquote by C.H. Robinson fit across the entire continuum — focused on one segment," Biesterfeld said. "We can talk upstream about Navisphere Vision, which is completely on the other side of the continuum. We meet customers where and how they want to buy."
Biesterfeld put Freightquote into the larger context of C.H. Robinson's accelerating spend on technology. During the past 10 years, Robinson spent about $1 billion on technology; it plans to match that investment over the next five years. About 80% of that spend is deployed to build expanded capabilities and new products, while 20% is used to modernize Robinson's digital infrastructure and architecture as its systems have gone from handling millions of shipments per year to billions.
Asked whether he thought increased capital expenditures on technology across the 3PL industry was a cyclical or secular trend, Biesterfeld said that "we really see our future as being more tech-plus, in terms of how we have the best technology in the industry and the continued importance of our people and our commitment to providing industry-leading service."
Although Freightquote by C.H. Robinson has its origins in an acquisition, Biesterfeld said that while Robinson is open to a conversation about future technology deals, there would have to be a compelling reason to buy something rather than build it in-house.
"[A target] would have to have something incremental to our product or product roadmap that we didn't have or couldn't create in our lower-cost environment," Biesterfeld said. Robinson is actively looking for deals that would expand its geographical reach and service offerings, though, perhaps especially in the global freight forwarding division.
While customer service and carrier relationships can certainly benefit from leading technology, internally the goal of Robinson's technology investments is to make its employees more productive.
"There's been a pretty consistent linear relationship between headcount and revenue, but you're starting to see it decouple in some parts of our business and improve our unit economics," Biesterfeld said.
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