Fueled by the pandemic, the logistics industry has been involved in a multi-year trend to adopt technology that replaces paper forms with digital information.
Driven by carriers that handle about 95% of the country's LTL freight, freight digitization is reaching a critical mass. LTL volumes are increasing as retailers reposition their networks to support growing ecommerce purchases for B2C and B2B markets. Shippers that stick to traditional annual rate contracts will pay more for transportation than they should and may have difficulty securing volumes.
Laggards that fall behind in freight digitization efforts will find themselves in a non-competitive position in the near future. The future is real-time data enabled by APIs or software that allows software to communicate with each other. Information including pricing, bookings, bill of lading information, shipment tracking and tracing, freight billing move seamlessly between parties. Dashboards and desktops are updated immediately as all parties are plugged into the solution-agnostic data stream.
Tapping into digitized freight information via live APIs helps shippers and carriers develop deeper, transparent relationships. They recognize the benefits that flow to the bottom line from improved transparency and visibility at every step of the freight execution path.
Real-time pricing information empowers shippers and carriers to negotiate on a lane-by-lane basis. There's no need to rely on a single averaged rate base. Carriers develop individualized tariffs that reflect the realities of their networks rather than an industry-average tariff. Essentially, each shipment undergoes a route optimization based on the lane, shipment parameters and carrier priorities.
Shippers get rates based on attributes of individual shipments, resulting in reduced rates in many situations. For example, rates based on 1,000-lb. shipments aren't realistic for a 5,000-lb. shipment. Carriers and shippers review the lanes and loads that are mutually beneficial.
With spot market rates reaching new extremes within the same year and shippers under greater pressure to meet on-time in-full demands, carrier relationships are more important than ever. Smart shippers build strong relationships with their carriers for the tough time like these. They won't have to find new carriers during a capacity crisis as carriers chase higher rates.
Information moves digitally rather than via outdated technology like EDI or paper. Booking and confirmation happen in real-time. Shipments are tracked and traced as needed, with automated alerts for any delays or exceptions. There's no need for time-consuming check-in calls and no manual data retrieval. When you order online, you expect to have this level of information automatically. The same level of visibility is available for your LTL shipments.
In this climate, assumptions underlying the annual contract simply aren't relevant a few months later. Instead of making decisions based on data from last year or even last quarter, you can use recent data that reflects the current reality.
Auditing & payments
Freight bill management is fast, efficient and error-free because there's no manual data entry or scanning. Accessorials and load requirements are rated accurately upfront, reducing the need for audits and adjustments after delivery. Logistics staff manages exceptions rather than reviewing every freight bill. There are fewer audits, faster settlement, and better reporting and cash flow.
Leveraging live data reduces costs and improves efficiency. With precision pricing, freight spend is more productive, and there's less manual handling of data from dock to dock. Shippers reap double-digit percentage savings with the same carriers, just by using live pricing instead of averaged rates. Digitized freight information is the fuel for business intelligence that drives logistics performance.
With shared information, shippers and carriers leverage existing relationships more effectively. Data-driven conversations replace anecdotes and misperceptions.
It isn't easy to embark on a technology and process upgrade to participate in the new world of freight digitization. Companies find it liberating to be free of manual processes, scanning emails, processing freight bills and updating spreadsheets. Resources can be focused where they deliver more value, and productivity impacts the bottom line.
Find out more about how your company can capitalize on freight digitization in our free guide.