Marketplaces and crowdsourcing business models are disrupting every category of logistics, from international freight to same-day local delivery, and everything in between.

Marketplaces connect buyers with sellers, with sellers defining specific service features and price, and buyers deciding which seller, feature set and price suits best. The contract is between buyer and seller, with the marketplace intermediating the transaction. On the other hand, crowdsourcing service providers (sellers) define a consistent set of service features and pricing, and are the contracting party, outsourcing part of the service delivery to  the crowd – a range of  providers through an online, real-time bidding process.

Are marketplaces or crowdsourcing service providers business models more appropriate? Well, it seems to depend on the type of logistics service.

In a B2B environment, a marketplace can be effective in a logistics category where the service and commercials are already standardised, such as in the freight forwarding of containers. There is a common understanding as to what service will be delivered. On the other hand, a crowdsourcing service provider can be more effective where the market needs the provider to set a standard service feature set, quality and price. However, because the outsourcers are curated by a single entity, this naturally limits the supply (and scope) of the service, whereas marketplaces do not have such limitations.

And then there is margin – marketplaces take a small commission on each transaction, whereas crowdsourcing service providers set their own margins, which are disruptive because they are much lower than the industry average. Still, I have got to believe that a well functioning marketplace is more efficient then the general market in driving lower prices. Hence the advent of P2P (peer-to-peer) marketplaces for logistics services to price sensitive consumers.

International freight forwarders handle end-to-end multi-modal freighting. B2B marketplaces such as Freightos and  Shippers connect shippers (buyers) with freight forwarders, earning a commission from the freight forwarder . In the supply chain, freight forwarders, in turn, book freight with various carriers to build the end-to-end trip, and in some cases to consolidate freight into full containers. One of the challenges in freight forwarding is the availability of real-time structured data from carriers, making marketplace automation difficult. Freight forwarders focusing on building technology to deal with this issue include iContainers, Flexport and BoxC . At the other end of the spectrum, a P2P marketplace that works for the casual transportation of goods internationally, connecting travellers (sellers) with those that need to move small items (buyers) such as personal effects, documents and parcels is PiggyBee.

The outsourced service provider model is more common in the U.S. long distance trucking market, with companies such as Cargomatic, KeyChainLogistics, Transfix, GotFreight and Truckin providing services to shippers at standardised pricing and crowdsourcing the truck carriers,  with margins of  5% commission compared with the industry 14.3%. An exception is Uship, which is a marketplace enabling trucking carriers (sellers) to bid on price for the business from both consumers and professional customers, getting paid by the marketplace immediately on delivery.

This is where the most disruptive activity is happening, probably due to the ease of implementation by startups on a limited geographical scope prior to scaling. The crowdsourcing service provider model is the model of choice for local delivery, with companies like Zyllem in South East Asia and Zipments in the US outsourcing to both casual and professional couriers, and providing services such as same-day-delivery or next-day-delivery to e-commerce providers and others. Postmates provides a service “within minutes” to cater for restaurant deliveries in certain U.S. cities. On the other hand, moving locally favours the marketplace model, due to a price-sensitive consumer market, with marketplaces like Ghostruck and Bellhops providing the service. Companies in local storage that have tried the peer-to-peer marketplace model do not appear to have been successful, but a crowdsourcing service provider model providing a full  fetch-deliver-storage service, crowdsourcing the fetch and deliver, has emerged  (MakeSpace).

Whilst these services can be booked on a stand-alone basis from the service providers website, the real power comes from merchants integrating the logistics services into their e-commerce website, through an API. Think of an e-commerce store which provides its customers the ability to book same-day delivery of the item at checkout time or the restaurant that provides a range of swift delivery options through its website at checkout time.

These marketplace and crowdsource business models are creating opportunities for new entrants in logistics around the world. This is only the beginning, however, as new technologies such as autonomous vehicles, drones, the Internet of Things and the blockchain will drive even greater disruption in logistics in the not-too-distant future.