Freight is everything in the transport business

"Freight" is an absolutely essential term in the transport business. It colloquially refers to cargo, i.e. the goods that a carrier transports from a shipper to a destination on behalf of a freight forwarder. This is done by land with trucks, by rail with freight trains, by air freight or by sea. Multiplying transport requirements make it necessary to combine individual means of transport. This is known as multimodal transport. Legally, though, freight also refers to the payment owed this type of transport.

What is a freight exchange?

A freight exchange brings together supply and demand for cargo space in the logistics industry. It thus represents a platform – now located predominantly online – where freight forwarders and carriers can offer available loading capacity and cargo space, and companies, retailers, wholesalers and manufacturers can book these resources. There are freight exchanges for all common types of transport: road, sea, air and rail. These platforms use a fee model with different tiers for different requirements: per order, for a certain time (monthly, etc.) and available with premium functions. Logistics service providers and freight forwarders receive transport orders for a certain fee. The orders are based on key transport factors:

  • Load size
  • Route and trip planning
  • Delivery dates
  • Certain sizes of transport vehicles
  • Available capacity
  • Advertisement of available cargo space for return transports

Why do logistics companies use freight exchanges?

The platforms help minimise dead runs by efficiently planning available capacity. They help shippers plan deliveries of freight and goods on a route while enabling carriers to offer available cargo space to customers on return routes. That means shippers usually receive several offers for a shipment and so can lock in a lower freight rate. Carriers increase the utilisation of their vehicles, thus minimising dead kilometres and optimising their profit. Freight exchanges also give small logistics start-ups the opportunity to land their first orders and build up their own transport network.

What are the different types of freight exchanges?

  • True freight exchange: It connects shippers and carriers. Freight forwarders and carriers can search for available freight and take the order after negotiating prices. Shippers can also search for available vehicles and hire carriers.
  • Freight exchanges operated by individual freight forwarders: In this case, freight forwarders give carriers access to their in-house transportation management system (TMS). The carriers can see the freight being processed through the TMS, while the freight forwarders can manage their own tenders.
  • Direct-dealing intermediary: In this case, the freight exchanges enter into the shipping contract without operating their own vehicles, trucks or other means of transport. This generally works in the same way as a freight forwarder opening up its scheduling software. The difference is that direct-dealing intermediaries do not run a traditional freight forwarding business.

Back to the wiki

Get the best out of your logistics!

Make an appointment now