Technology plays a much bigger role in today’s logistics optimization and shipper-carrier relationships than it did just a few years ago. And just in time: We’ve seen some interesting bidding trends over the last year or so, especially in the domestic trucking industry, where:
- 2017-2018’s lack of trucking capacity—a large part of shippers’ bidding activity—meant shippers went to bid not only earlier, but in much greater volume than previous years (a 15% YOY increase in 2018).
- Shippers are seeking to be more proactive about assessing spot market rates for more effective demand planning.
- Carriers have realized they have a lot to gain from using technology to assist in finding better loads, which works to reduce their operating costs and maximize profits.
How Shipper-Carrier technology collaboration creates efficiency
We’re heading into a period when automating transportation processes and reimagining processes in a digital format are cutting down on the amount of resources required to execute. Furthermore, as we move into 2019, several larger trends in shipper/carrier collaboration are now taking place:
- Using technology to keep drivers on the road, reveal backhaul opportunities, minimize empty miles and ensure better planning and compliance: Extreme dwell times have long been a carrier hazard in the United States. Collaborative technology minimizes detention and dwell time, allows carriers to stay in line with recent hours-of-service regulation and reveals backhaul opportunities. Carriers can use technology to bid on loads, select their own un/load appointments and find return loads to supplement their planned schedules. This type of shipper-carrier collaboration enables more efficient advance planning, so carriers are able to maximize their resources to execute more jobs and free up available capacity. Collaboration platforms also give carriers a little more flexibility in terms of supporting drivers, whether that means paying better wages or making their lives more predictable, which can be a net positive for everybody.
- In addition, with shared information and clear, realistic schedules, carriers not only know where they need to be at given time, but also have options in terms of when they can arrive at a shipping dock. Knowing exactly how long it takes to get in and out of the dock helps to reduce carrier idle time and significantly decrease the number of empty trucks and drivers standing around waiting. Time-slot management or dock scheduling platforms keep everybody on the same page and focused on loading and unloading times, with the goal of getting the driver back on the road as soon as possible.
- Reducing costs thanks to software-as-a-service (SaaS): Our industry is moving away from on-site maintenance software and licenses with massive upfront entry fees. The SaaS model is quick to implement, well-defined and transparent. And it gives both shippers and carriers much more flexibility since pricing can be finetuned via modules according to the actual scope of requirements or transactions, meaning that there is no need to purchase a full suite or solution with massive fixed entry fees. In Europe, the carriers typically pay for these types of technologies because they see the benefit from a resource perspective and the cost gets passed on to the customer. The United States is just catching up to this concept—a big benefit for shippers.
- Using Big Data to leverage the transportation space Having a huge pool of data on inbound and outbound shipments provides a critical mass that enables the system to actually start doing proactive load-matching and load-triangulation: You can define a geographical radius or a timeline, set the system to look at your outbound load dates, and then troll through the Big Data to look for an inbound load at another company nearby (within that radius). Shippers can check the traditional carriers for these loads and then compare and cross-reference them with their approved carrier list and see if there is overlap (an opportunity for a kind of triangulation). It’s not a new concept, but it’s hard to implement at a human level. Shippers can look at benchmarking across all modes, using Big Data for benchmarks on pricing, demand, seasonality, etc., all of which helps to plan and forecast ahead of the curve.
- Bringing transportation sourcing in-house as a strategic skill and benefit. At the end of the day, shippers know it’s all about providing a service to their customers. And they recognize that a little of their control has slipped away. So they’re implementing continuous improvement strategies, including bringing some of those processes inhouse in a move to “digital insourcing.” Digital insourcing provides several strategic benefits: It’s designed to increase the predictability of capacity; help shippers develop or redevelop their sourcing skills and keep that knowledge and their supplier relationships in-house; let them hear straight from the market and communicate in a more agile manner; and find potential new capacity sources, with a pool of qualified, identified carriers with the optimal geographies, modes, special equipment requirements and more. Most importantly, it lets shippers run their own bids in a completely neutral fashion.