Social media tools and concepts, which have transformed the way people communicate in their personal lives, are now starting to enter the business realm. One of the key learnings from the consumer experience is that privacy is important. Although you can make information about yourself visible to the general public, most people prefer to share information only with individuals they already trust and have a relationship with. This will be the norm in the business world too, and especially in transportation, where shippers place the reputation of their companies and brands in the trust of their carriers. And the stakes are even greater today with the recent introduction of the CSA 2010 safety initiative.

Trusted relationships matter, and transportation is a relationship-based business.

It is a big reason why so many dotcoms failed more than a decade ago when they tried to bring the online marketplace/exchange model, which is best suited for commodity products, to the transportation market.

It is why the vast majority of freight moves with contracted carriers, not the spot market.

And when a load remains uncovered after cascading down the routing guide, relationships still come into play. The first action many shippers take in this situation, particularly if they use a TMS, is to broadcast tender the load, not to the masses, but to a relatively small and select group of carriers, typically carriers they already have a relationship with on other lanes. And who do freight brokers call first when they face a similar situation? Their carrier friends, the ones they know well and trust.

This is the operating reality that any social media technology designed for transportation needs to consider. And it’s a big reason why today’s announcement by MercuryGate about “Freight Friend” caught my attention. Here is an excerpt from the press release:

Freight Friend is a private network website for shippers, brokers and carriers. Shippers and brokers post loads that are visible only to the carriers they trust – their “friends”. Carriers post available capacity and regular lanes to one web site, knowing that only their shipper or broker “friends” can see and utilize them. Full radius based searching and matching functionality seamlessly connects the right loads with the right trucks.

Freight Friend was conceived and developed by Noam Frankel, one of the founders of American Backhaulers (a leading broker acquired by CH Robinson in 1999), and is jointly owned with MercuryGate (an ARC client). Noam and Monica Wooden, the CEO of MercuryGate, gave me a sneak peek of the solution recently.

Freight Friend Screen Shot (Source: MercuryGate; click to enlarge)

Freight Friend Screen Shot (Source: MercuryGate; click to enlarge)

On the surface, Freight Friend has similar features to other online load boards. Shippers and brokers can post loads, carriers can post available trucks, you can search for matches, and so on. But the big difference is evident when you register and log in for the first time. There are no loads posted, no carriers listed, no matches displayed. It’s like when you first sign up for Facebook or Twitter and very little information shows up because you haven’t “friended” or followed anyone yet.

When it comes to social media, a lot of people focus on the big numbers: Facebook has more than 500 million members, Oprah Winfrey has almost 5.5 million followers on Twitter, and so on. But in practice, social media is not about numbers, it’s about relationships. Facebook is really a federation of thousands of small relationship networks that add up to 500 million people. And although 5.5 million people follow Oprah, she only follows 31 people! She doesn’t have the time or interest to read the status messages of 5,499,969 people; she’s only interested in keeping in touch with the handful of friends, colleagues, and other business professionals that she already knows and trusts.

This is the same philosophy that underpins Freight Friend and differentiates it from public load boards. The main objective is not to connect thousands of shippers, brokers, and carriers together, but to facilitate the matching of available freight with available capacity between known and trusted parties (“freight friends”), a process that for the most part still happens manually today, with shippers and brokers picking up the phone and calling their key carrier contacts.

This concept of “freight friends” is already evident in the marketplace. Last year, for example, Con-way Multimodal launched TweetLoad, which allows carriers to find loads using Twitter (see “Mobile + Social Media = Supply Chain Innovation”). Although anyone can follow the TweetLoad feed, only carriers that are registered partners of Con-way Multimodal’s third-party capacity network (read: vetted “freight friends”) can accept loads. Open Mile, a start-up I wrote about recently, is another example.

Just like many companies are using existing social media platforms like LinkedIn to build their own private groups and networks, Freight Friend is essentially positioning itself as a common online technology platform for brokers (and shippers) to enable their private load boards. If successful, the end result will be a federation of shipper-carrier-broker relationship networks.

Getting there won’t be easy, however. The immediate challenge for Freight Friend is getting a critical mass of users onto the platform as quickly as possible. The most logical strategy is to target brokers and shippers with large carrier networks to come on board first. MercuryGate, for example, has a freight management client that works with more than 30,000 carriers. Once they are on the network, these carriers might then encourage small brokers and shippers to also use Freight Friend, as a way to centralize their load matching transactions with as many shipper and broker “friends” as possible. Or so the theory goes.

Freight Friend does not replace a TMS. Once a match is made, a TMS is required to execute the rest of the process. Not surprising, Freight Friend is already integrated with MercuryGate, but integrating with other solution providers will be important. The most likely candidates will not be shipper-centric solutions, but TMS applications used by carriers and brokers, like TMW Systems.

On the technology front, the most critical missing component is a mobile user interface, which Freight Friend is working on and plans to enable soon.

The bottom line: Social media technologies open the door to many innovative possibilities in supply chain and logistics. But a key lesson from the dotcom era, at least for me, is that the most meaningful and sustainable innovations are those that “evolutionize” the way people and companies work together, not revolutionize them. The people who get the most value from social media are not necessarily those who have the most friends or followers, but those who weave social media into the fabric of their existing relationships. The same will be true for companies.

Relationships matter, and they matter the most when challenges arise. But this belief is constantly being put to the test in transportation, where shifts in demand, capacity, and fuel costs can strain even the best relationships. Will a social media platform like Freight Friend have a positive or negative effect on shipper, carrier, and broker relationships if oil reaches $150 per barrel and there isn’t enough trucking capacity to meet demand? The answer is completely in your hands.