Source: C.H. Robinson 2016 Annual Report<\/em><\/p>\nC.H. Robinson\u2019s value to shippers is its knowledge of the mobile, fragmented, and opaque US long-haul trucking marketplace. Shippers, especially those with complex requirements (e.g., refrigeration) would find it difficult to build relationships with small contract carriers on their own. Similarly, contract carriers would likely have difficulty finding customers. C.H. Robinson facilitates transactions by serving as a \u201cmarket maker.\u201d In exchange, the company typically receives a 12% commission on the cost of shipping [3].<\/p>\n
The company historically relied on human freight brokers to facilitate transactions [4]. Their rationale was that many shippers had custom needs \u2013 such as refrigeration, expiry dates, or light exposure restrictions \u2013 which the company needed to accommodate on a case-by-case basis. Today\u2019s digital tools can increasingly handle such complexities, often more efficiently than any human.<\/p>\n
The efficiency and cost advantage provided by digitization has proven disruptive in other industries. Uber, a ride-sharing company recently valued at $68 billion, is one of the most visible and successful examples [5]. By automating driver-rider matching and route guidance, Uber realized significant cost and quality advantages over traditional taxicab agencies. It was then able to lower rates for passengers and increase market share.<\/p>\n
C.H. Robinson executives recognized the potential for an Uber-like disruption in the freight brokerage industry. In 2012, they launched Navisphere, a technology platform for managing transportation and sourcing activities across the C.H. Robinson network [6]. The platform has experienced modest success, with over 220,000 organizations connected by the end of 2016 [7].<\/p>\n
Uber enters the market<\/strong><\/p>\n
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