2025 Digital Freight Matching Roundtable: From spot chaos to smart capacity

The digital freight matching (DFM) market continues to rapidly evolve as industry players integrate AI and automation to boost efficiency and remain competitive amid ongoing freight recession-related pressures. 

To that end, traditional brokers are increasing their adoption of advanced technologies like AI, automated quoting, and predictive pricing to scale operations. While market conditions remain challenging, declining interest rates and investor interest are driving innovation and consolidation.

And as technology becomes table stakes, shippers favor solutions that deliver results. What’s more, one of our panelists predicts that by 2026, over 75% of DTM gross revenue will come from digitalized brokers.

Joining Logistics Management this year to help shippers put the DFM market into perspective are: Evan Armstrong, president of Armstrong & Associates; Ben Gordon, managing partner of Cambridge Capital and managing partner of BGSA Holdings; and Lee Klaskow, senior freight transportation and logistics analyst at Bloomberg Intelligence.

Logistics Management (LM): How do you view the current state of the digital freight matching market?

Evan Armstrong: Leading domestic transportation management/freight brokerage 3PLs are using “bolt-on” DFM applications such as Parade or proprietary DFM algorithms within their transportation management system [TMS] to match shipments to motor carriers automatically. We’ve dubbed these ‘intelligent capacity systems.’

To evaluate the true impact of technology, third-party logistics providers [3PLs] are increasingly focusing on two key metrics: loads handled per person per day [LPPD] and gross revenue per person per year. These metrics provide insight into the efficiency of a freight brokerage operation. From a buy-side merger and acquisition [M&A] perspective, we assess these measures to help gauge a freight broker's enterprise value and the potential benefits of further automation.

Our benchmark for LPPD concerning direct labor—comprising account managers, carrier sales, and customer service representatives—is 15 LPPD for spot-market sourced truckloads. The gross revenue per person per year should also be $1.43 million or more. We work strategically with freight brokers to develop digitized operations that exceed these benchmarks. Now, using DFM and voice AI tools to support carrier sales, a few freight brokers are hitting 40 LPPD, driving a competitive advantage.

Lee Klaskow: We’re moving forward at Mach speed. This is obviously being driven by growth and evolution of machine learning and AI in supply chains. We’re very excited about what AI can do for capacity providers, brokers and shippers.

It will take out costs and inefficiencies and lower prices for shippers, and it’s one of the few emerging technologies that might actually deliver on its hype. I’ve been covering transports for the better part of 20 years and it’s really the first technology that I’m excited about—and it seems we’re only in the early innings with its adoption.

Ben Gordon: The digital freight matching market is a subset of the freight marketplace as a whole. We’re living through the worst freight recession in American history. Over the last 3.5 years, freight rates in many categories [e.g. truckload] have dropped over 50%, and we’ve witnessed record bankruptcies—on the carrier side and on the brokerage side. And just when we thought the worst was over, Liberation Day brought a wave of tariffs, adding uncertainty and freezing freight decisions. So, it’s been a long, cold winter.

Amidst that market malaise, DFM has faced similar challenges. Some, like Loadsmart, have succeeded by automating workflow, cutting costs, and creating operational efficiency. Others, like Convoy, have created value through M&A. Indeed, it takes a catalyst to succeed amidst these challenging conditions.

LM: With market conditions similar to last year, with lower rates and excess capacity, how much of an impact does that continue to have on the DFM marketplace?

Klaskow: Its obviously squeezing profitability, which can reduce a smaller company’s ability to reinvest in their DFM marketplaces. Obviously a more robust freight environment will be better for capacity owners and freight brokers.

Gordon: In the end, you can’t fight the tape. The overall market pressures are inescapable. Lower rates, excess capacity, and risk-averse customers have all posed challenges to DFM companies.

Armstrong: Well, we’re starting to emerge from the freight recession that began in late 2022. The domestic transportation management third-party logistics market segment—comprising 82.6% freight brokerage and 17.4% managed transportation—will slightly increase 1.3% by 2025, reaching $124.3 billion in gross revenue.

For freight brokers, having DFM capability is crucial during periods of tight carrier capacity, particularly to secure capacity in the spot market. In the current environment, reducing costs through automation is a necessity, as is the focus on managing a loyal carrier base, increasing utilization within that base to ensure solid operational performance, and meeting the needs of contractual shipper customers.

LM: Do you see more entrants coming into the marketplace in the next couple of years, or are things in more of a holding pattern?

Gordon: To the contrary, I see some DFM companies exiting the marketplace. I also see traditional brokers boosting their technology. For example, C.H. Robinson believes it can quintuple revenue per sales/ops executive in the next two years due to AI. So, traditional brokers that invest in technology are becoming the winners in DFM.

Armstrong: As legacy freight brokers like C.H. Robinson and RXO adopt DFM and increase their investment in other technologies, it’s becoming increasingly difficult for new entrants without the threshold network scale of over $100 million in freight spend to compete. Although the gap is still relatively small, the competitive advantage among leading freight brokers is growing wider.

The caveat is that DTM 3PLs operate in a business-to-business market. As long as shippers are willing to collaborate with a 3PL, regardless of its size, new entrants will continue to emerge. These new entrants are eagerly adopting DFM technology, split freight brokerage models, automated rate quoting, and track and trace systems, all while still upholding the traditional ‘work hard/play hard’ freight brokerage culture.

Klaskow: The market will be driven by lower costs of capital and emerging technologies. The Fed began to ease with its 0.25% points cut in September, and the market is currently pricing in four or five more 0.25% cuts. Lower interest costs will lead to lower cost of capital, which could spur more investments from venture capitalist and private equity investors.

This is an industry that’s defined by tech and relationships. So, there’s always room for someone that comes to market with a better mousetrap. In the end, it may displace platforms that are standing still and not innovating.

LM: What types of stakeholders are making the move into this segment and why?

Armstrong: As interest rates decrease, we can expect to see a rise in targeted outside investments in 3PLs and innovative solutions for freight brokerage digitalization and automation. This includes voice AI bots, automated spot-market quoting and pricing, improved shipment visibility, and back-office functions such as accounts receivable collections. Strategic investors will continue to seek opportunities for operational and geographic expansion through M&A, which will involve the acquisition of DTM 3PLs and solution providers.

Klaskow: There’s still a good amount of private equity and venture capital money in the market. It’s attractive, since it’s a non-asset, high return on invested capital business. There are plenty of players out there fighting for wallet-share with technology solutions they view as superior. It will be the market’s job to figure out which of these companies have value and which that don’t.

For niche players, being acquired into a larger platform might be the only option for those that can’t build scale. It also attracts technologists that see a large, complex and fragmented industry that’s fraught with inefficiencies—which they hope can be solved with technology. You’re also seeing traditional brokers lean into the technology, whether it’s working with a partner or trying to build their own platforms.

Gordon: There are two types of entrants. First, we have traditional brokers that are using their footprint to drive automation through existing workflow. Second, we have new entrants that are using AI to create a competitive advantage.

For instance, Greenscreens.ai gave brokers a leg up in terms of predictive pricing. This led Triumph to buy them. Similarly, Pallet is using AI to automate brokerage workflow from start to finish—and their customers gain a strategic edge. These two types of companies, and their customers and partners, are the likely winners.

LM: Who are the biggest—or most important—players in this space, and what makes them stand out?

Klaskow: There are a number of players that operate in various parts of the DFM space. You have load boards like DAT and Truckstop. And there are large public brokers like C.H. Robinson and RXO, as well as more diversified players such as J.B. Hunt.

There are a number of fast-growing private companies like Arrive Logistics that are making a name for themselves. For many of these companies it’s about scale and being focused on providing great outcomes for capacity providers and shippers alike.

Gordon: First, you have pure-play DFM companies that are broadening. Loadsmart is winning by expanding its scope of services. For instance, it can provide brokerage, managed transportation, dock scheduling, TMS, and a host of capabilities. Convoy sold to DAT, and can now sell a broader bundle. 

Second, you have truck brokerage incumbents that are automating. C.H. Robinson is one example. A mid-market illustration is Everest, which is using technology to automate more and more of the business process.

Third, you have the arms dealers, selling technology to all brokers that are interested. Pallet stands out as a potential winner among many others.

Armstrong: Uber Freight, along with leading tech-enabled legacy freight brokers C.H. Robinson and RXO, have automated the processes for shipment quoting, tendering, and acceptance with shippers. They’re also automatically matching spot market loads to carriers using DFM, primarily within private carrier networks using lane history.

Additionally, they offer 'book-it-now' functionality, allowing for automated tendering and acceptance. These companies can track 80% of shipments in real-time. However, small- to mid-sized 3PLs often lack these capabilities unless they partner with technology companies.

For instance, they can work with DTM AI providers like Parade for DFM and capacity management, or with Triumph Pay/Greenscreens.ai for upfront pricing. Often, AVRL is used for robotic process automation, allowing different TMS and websites to interface.

LM: Do you think shipper usage and adoption of DFM technology has increased or decreased over the last year?

Gordon: I think shippers are neutral on DFM. They want solutions for cost-effective, high-service freight management, and will take in whatever form gives them the best result. That could be DFM. Or it could be traditional brokerage. Or it could be a hybrid. In the end, it’s all about results.

Armstrong: Most shippers interact with freight brokers via applications that rate-shop the spot truckload market via freight broker quotes versus their contractual carrier and freight broker rates using an application such as AVRL.

Outside of the rate shopping, most shippers are still managing primarily contractual carrier and freight broker relationships under a traditional lane-by-lane waterfall process with primary to tertiary carriers. However, the use of shipper load boards and interest in putting more volumes out for spot quoting is on the rise. For pure DFM technology, most shippers rely on freight brokers that are actively using DFM.

Klaskow: I would like to think that it has increased because we, as a society, are doing more online and our workflows are more and more digital. That being said, when a shipper or trucker needs to talk to someone, it’s imperative there’s someone at the other end of the phone that can help.

That’s why we don’t see companies that are 100% tech-focused winning full out. A hybrid model of tech and people should win the day over in the long-term. It’s that human connection that’s critical between brokers and carriers as well as between brokers and shippers.

LM: Where do you see the DFM market in the next three-to-five years?

Armstrong: We’re reaching a stage where the largest digital freight brokerages are efficiently receiving truckload tenders at either contractual or automated spot market prices. This process occurs through interfaces connecting a shipper’s TMS to the broker’s TMS. The broker’s intelligent capacity system then selects the optimal carrier by utilizing detailed, data-rich smart carrier profiles, lane history, and various other data points.

In this digitalized environment, a delivery appointment will be scheduled if necessary. This action will activate the visibility management system, which will provide transit status updates until the delivery is completed. Once the delivery is finalized, the back office will automatically upload proof of delivery information into the TMS, and the freight bill payment or carrier settlement will be initiated.

Transactional freight brokerage is nearing the automation levels seen in managed transportation. By 2026, we estimate that there will be over 50 digitalized freight brokers in North America, accounting for more than 75% of the total DTM segment gross revenues. At that point, more than 15% of spot-market truckloads in the U.S. will be automatically tendered and booked with carriers—and this figure is expected to grow even further in the following five years.

Klaskow: My guess is that more and more loads will be transacted without human interactions. Brokers will become more productive, handling more loads per headcount and driving the cost curve lower. We expect brokers to pursue scale to mitigate this impact to earnings. This will drive market consolidation of the brokerage industry, which is currently highly fragmented.  

Gordon: DFM will fuse with brokerage. History repeats itself. As you recall, “internet logistics” companies were a standalone category in the late 1990s, but within a decade every logistics company had an internet presence. In much the same way, truck brokers will add more technology and their offerings will be indistinguishable from those of DFMs in the long run.