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What is a freight exchange?

Gerhard Hänel
Gerhard Hänel14.08.2019 5 min

Freight exchanges or also cargo space exchanges are marketplaces where demand and supply of freight or cargo space find each other. A freight exchange differs from a cargo space exchange in that the traded goods are different. Meaning that either the freight or the cargo space is offered. The exchanges thus act as intermediaries between shipping and transporting companies and serve to compensate for over- or under-capacities. However, they are also used to forward orders - accordingly, the supplier is not necessarily a shipper (e.g. a production company) but often a transport service provider such as a forwarding agent or 4PL service provider, who assumes that other transport service providers can guarantee more cost-effective processing for this specific transport order.

Classic application example of a freight exchange

If, for example, a medium-sized, southern German freight forwarder receives a smaller transport order from Hamburg to Berlin, he will most probably not have any free loading space available at the right time and place. He will try to pass this order on to another forwarding agent. One possibility is to advertise the order in a stock exchange.

Compensation of over- and undercapacities

Freight exchanges or cargo space exchanges are therefore primarily concerned with the optimised allocation of transport capacities. The objective for the transporting company is to avoid empty runs and to increase capacity utilisation. Freight exchanges are also used less frequently for pure order generation. At the same time, shipping companies are interested in receiving good prices for transport services. Due to the optimized allocation of transport orders and the transparent market price, such platforms often achieve low prices.

Conclusion

Despite frequent criticism, freight exchanges and cargo space exchanges have a right to exist. For shippers, they offer the opportunity to achieve good prices and for transport service providers to avoid empty runs and low capacity utilisation - a classic "win-win situation".