The value of trucking

Sept. 1, 2000
What will you do if freight movement becomes a commodity?Most of us expect e-commerce to change the way trucking conducts business, but we tend to focus on the small, immediate details such as the speed and convenience of Internet access. While we might see the implications two or three steps down the path of change, we really don't spend much time considering where that path is leading.Chuck Martin,

What will you do if freight movement becomes a commodity?

Most of us expect e-commerce to change the way trucking conducts business, but we tend to focus on the small, immediate details such as the speed and convenience of Internet access. While we might see the implications two or three steps down the path of change, we really don't spend much time considering where that path is leading.

Chuck Martin, author of Net Future (McGraw-Hill), is one of the few who have tried to take a longer view, and his basic prediction poses some interesting questions for any fleet manager involved in moving cargo. In brief, Martin believes that e-commerce is creating "a great value shift" where traditional core assets become peripheral to an industry's new function.

For example, he points out that shared real-estate listings have been a core asset for real-estate brokers, but now listings are widely available to anyone with Internet access. You no longer need to pay a broker to reach a large market for your house. With listings a commodity, brokers will have to find a new way to provide value. Perhaps, he suggests, they will give away their listings to local newspapers and develop a new revenue stream based on supplying after-sales information to companies interested in selling new homeowners other services.

Automobile dealerships, which now function as the primary retail marketers for new cars, are also facing a "value shift" as new web markets make it easy for consumers to get a car for a few hundred dollars over cost. And, he asks, why wouldn't a related industry like insurance begin to offer cars at cost for those willing to sign insurance contracts? The value of the former core asset - the car - isn't important to the insurance company, which instead is interested in generating new customers for its own core asset.

It's easy to see the first signs of a similar value shift in the cargo-moving portion of trucking. Although freight exchanges are still in their infancy, it doesn't take much imagination to see them turning freight carriage into a commodity in fairly short order. Trucks will still move the cargo, but instant, widespread access to load offerings will change the way customers value that service.

Whether you run a private fleet or a common carrier, you probably don't like the way that sounds. But if you can be objective for a minute, you'll admit that the shift seems inevitable.

The important question, then, is how do you leverage that former core asset to create a new one? Martin suggests that the biggest opportunity during his great value shift lies in co-opting the value of someone else's product or service to increase the value of your own. His insurance scenario is a good example.

I don't see well enough into the future to identify a viable value shift for the trucking industry. However, when some smart fleet manager does, I strongly suspect it will rely on deeper involvement in their customer's or parent company's business.

About the Author

Jim Mele

Nationally recognized journalist, author and editor, Jim Mele joined Fleet Owner in 1986 with over a dozen years’ experience covering transportation as a newspaper reporter and magazine staff writer. Fleet Owner Magazine has won over 45 national editorial awards since his appointment as editor-in-chief in 1999.

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