Coordination Is the Bottleneck

Today more than 10,000 vehicles are on the Oway network. People assume the hard part of running it is finding trucks.

America has plenty of trucks, and plenty of open space on them. The hard part is knowing, in time to act, which truck has room for a given shipment and is heading the right way.

Capacity is everywhere and invisible

On any given morning there is an enormous amount of open space on American highways. As we covered earlier in this series, one mile in six is driven completely empty, and the average loaded truck runs at a third to half of its rated capacity.¹ That is roughly 32 billion empty miles a year, plus the unused space on every loaded trip.

The space is spread across thousands of trucks, changes by the minute and is known only to the drivers and dispatchers inside them. By the time that information travels through a phone call, an email and a load board to a shipper, the truck has usually left. Capacity information has a shelf life measured in minutes.

ELDs solved part of this. Once carriers connect to Oway through them, Juno can see where open space is now and where it will be in an hour. On active lanes, a truck can be at a shipper's dock in an average of 30 minutes.

Most of the work comes after the match

Finding a truck with space is the first of six steps. Turning a match into a delivered shipment also means:

1. Verifying the carrier has active authority, the right insurance and a connected ELD.
2. Confirming the stop fits the truck's schedule and the facility's dock hours.
3. Agreeing on a price both sides accept.
4. Producing the bill of lading.
5. Tracking the load and confirming delivery.
6. Paying the carrier and invoicing the shipper.

Across most of the industry, people still do each of those steps by hand, moving information between EDI messages, PDF rate confirmations, emails and spreadsheets. That labor is a large part of why moving a few pallets costs what it does. It is also why so many freight startups that digitized the broker never changed the economics. The interface improved, while a person still did the coordination behind it.

What automation needs

We automated those steps one at a time. Every one depended on the same thing: a reliable, current picture of what exists, where it is, what it can do and what it costs.

When that picture was stale, every automated decision got worse. A price built on yesterday's capacity is confidently wrong. When the picture was accurate, decisions that used to take a day took seconds.

The lesson extends well beyond freight. The physical economy is limited by coordination, and coordination is limited by information that nobody has been able to share live, safely and without giving up their position to a competitor. China showed in freight how quickly load factors rise once capacity becomes visible. The same holds for factory lines, warehouses and every other asset with time to sell.

From a network to an index

The internet had this problem before search. The information existed, scattered across millions of computers, and most of it was effectively unfindable. Indexing it made it usable, and a large share of the modern economy grew on top of that index.

The physical economy never got that layer. I wrote about what it would take in the next piece in this series, The Physical Economy Has No Index. After that, we introduce IOI, the system we are building to give it one.