Smart Solutions for Freight Challenges in North America

At the end of the day, shippers and carriers both need to take a long-term perspective on relationships. For shippers, this is easier if procurement is conducted by the transportation function rather than corporate procurement, which tends to focus almost exclusively on getting the lowest price. Yes, cost is important, but so are service, safety, reliability, capacity assurance, visibility, and other factors. In short, it is necessary to think beyond cost. Using index-based pricing is another approach to ensure prices stay aligned with market realities, but I haven't seen anyone adopt this approach yet.

 
 
It is part of the solution, along with hydrogen, natural gas, and other alternative fuels. At the moment, it is best suited for local, short-haul movements. As you noted, battery-powered electric trucks have many drawbacks currently, and the infrastructure to support them doesn't really exist yet — for example, the lack of charging stations and the inability of utilities to meet the growing demand for electricity.
See this post for additional perspective: https://talkinglogistics.com/2023/04/24/electric-freight-trucks-not-happening-anytime-soon-for-long-haul-moves/

 
 
It's no different from retailers and their suppliers. In both cases, each company is out to maximize financial benefit. We know regulation and price controls aren't good answers. The FTL market is pretty unique in that it has such a long tail. If you look at many other segments of logistics or other industries, consolidation inevitably occurs (ocean, air, banks, etc.). But the individual appeal and low cost of entry into trucking are very unique, and thus the market dynamics will always be different.

At the end of the day, shippers and carriers both need to take a long-term perspective on relationships. For shippers, this is easier if procurement is conducted by the transportation function rather than corporate procurement, which tends to focus almost exclusively on getting the lowest price. Yes, cost is important, but so are service, safety, reliability, capacity assurance, visibility, and other factors. In short, it is necessary to think beyond cost. Index-based pricing is an alternate approach being discussed, but we're still in the early stages of figuring out how to do it.

Big pendulum swings occur in such cyclic industries. When that starts to happen, at first we'll see much higher tender rejection rates, but then we'll get back to a balanced point where things don't favor one side so heavily—for a time. Then the next big external event will happen, and the process begins all over again.

However, smart shippers understand that if their contracted rates get too far below spot rates, they will start to experience a higher rate of tender rejections. The trend in recent years has been to conduct more frequent procurement engagements throughout the year ("mini-bids") to ensure their rates remain aligned with market realities.

Carriers prefer to have direct relationships with shippers and vice versa. Although contracts here in the US are non-binding, they at least provide some structure for "assured" capacity.

As highlighted in the report, here in North America, a growing number of companies are moving their sourcing and manufacturing operations away from China and back to the US or Mexico. In 2023, for the first time in more than two decades, Mexico surpassed China as the leading source of goods imported by the United States. This shift is being driven more by geopolitical and risk management factors (including a rise in import tariffs), but sustainability is certainly a side benefit.

In general, it depends on the specifics of each supply chain (e.g., product types, ship-to/from locations, volume, lead times, etc.) and what the inland waterways can handle, with barges being the common way to move freight.

As covered in the report, technology also plays an important role in combating freight fraud, including telematics, IoT sensors, real-time freight visibility, and other solutions such as Transporeon’s Trust Center, where carrier profiles "can be created with all the necessary documents, licenses, approvals, and certificates needed to operate as a trusted and compliant partner on the network."

Also, while not foolproof by any means, leveraging technology like carrier scorecarding to mitigate or completely eliminate double brokering is an area some of our customers are also looking at.

While generative AI is mainstream, in the transportation industry AI is currently structured around large language models, machine learning, and predictive data analytics. This means AI solutions won't start your tasks but will automate and significantly improve the efficiency and performance of some activities.

At Transporeon, artificial intelligence empowers our solutions with AI-based price predictions, AI-based ETA predictions to improve downstream operations, and carrier behavioral science to pick up on biases and strengths.