3 Technologies Streamlining the Future of Freight
We’re in an age where constant connectivity and digital workflows are streamlining all kinds of processes in freight transactions. From posting loads, managing documents, to making sure the shipper is properly invoiced so the carrier’s payment cycle can begin. Transportation management systems, telematics, and cloud-based business applications are giving 3PLs and freight brokers the information they need to make sound decisions and collaborate with their partners in the supply chain.
Still, the job of covering loads could be far more efficient.
- Let’s do the math. On average, it takes a freight broker seven phone calls to find a qualified carrier, and each call typically takes two minutes. If you have 15 loads to cover, you’re spending almost four hours on the phone.
- Owner-operators and small carriers use an average of 18 different freight brokers every month. They’re looking for partners that are transparent and easy to work with, from the moment they read a load post until the time their invoice is settled.
The next five years promises to bring a tidal shift in the way brokers use technology to put the right freight…on the right truck…at the right time…and for the right price.
Automation, algorithms, and “book-it-now” applications may seem disruptive and even threatening to an industry so reliant on human interaction. However, they have the potential to handle routine tasks with speed and accuracy so a freight broker’s experience and problem-solving skills can shine through.
With so many new technologies promising to be “the next big thing in freight,” what should 3PLs and freight brokers look for? Here are three areas where tech can improve efficiency and help people to make better decisions.
1. Freight Visibility
Knowing the location and status of a shipment is essential, especially when a late or off-schedule load threatens to disrupt a customer’s operations. Being on-time is important, but so is communication when you’re not on time.
Track-and-trace technology with GPS and geofencing is standard if you want to eliminate driver check-calls. It also automates notifications for truck arrival and departure, and enables you to confidently respond when shippers call to ask, “Where’s my load?”
As technology and expectations evolve, more shippers want the same up-to-the-minute location and status information, exception alerts, and proof of delivery as everyone else in the freight transaction. They also want visibility into performance and costs, to ensure that rates, accessorial charges, and other fees are applied correctly.
Visibility at that level is a huge challenge for a 3PL or freight broker that’s tracking hundreds of loads tendered to dozens of carriers using a variety of different systems. Fortunately, several tools can help improve visibility across a supply chain:
- TMS: At one time only a handful of people at a freight brokerage would use a TMS, and they used it only to access capacity and tender loads. Broker TMS features have greatly expanded. Now, inside sales reps, executives, business intelligence analysts, accounting staff, and others are logging in. Additionally, carriers and shippers connect through an API or third-party application to check their load status or pull data for their own reporting and analytics.
- ELDs: The electronic logging device (ELD) mandate requires most over-the-road truck fleets and drivers to use a device that automatically records a driver’s off-duty and on-duty time and communicates this information using telematics. The ELD rule has been a driving factor in the adoption of telematics among commercial fleets. With GPS, cellular networks, and cloud computing, ELDs open the door to carriers sharing not only location data but the availability of driving time with brokers, shippers, load boards, and other parties in the supply chain.
- Mobile Apps: Nearly 90% of truck drivers use their smartphones every day for work, primarily for navigation, phone calls, and texting. There are nearly two dozen mobile apps from 3PLs, freight brokers, and load boards that carriers use to find, bid on, and accept loads, with no phone calls required. In some cases, the carrier can elect to share their location with the broker (for instance, a GPS ping once an hour or within a geo-fence near pick-up and delivery locations) via the app, or agree to use the app to scan and send PoDs and other documents to the freight broker.
In each case, there’s no real visibility without the carrier’s buy-in and trust that their data is secure and will be used responsibly, and that there’s a business benefit.
For instance, a carrier may see risk in sharing ELD data. However, it may be worth it if that data can be used to recoup detention time, or to show that a driver is available based on a driver’s current location and hours-of-service (HOS) status. The driver can then have a load that’s automatically tendered and aligned with where they want to go next.
2. Book-it-Now Tendering
The desire for simplicity and automation is fueling the growth of digital freight brokers that offer a “book it now” option for tendering freight.
It eliminates lengthy searches and negotiations and allows 3PLs and brokers to focus on solving problems, building strategies, and personally communicating with drivers and customers.
From the shipper’s perspective, here’s how the process works:
- From the broker’s home page or through an API or TMS integration, you enter your pick-up and delivery address, preferred transit dates, and other details about the load, and then hit the “quote” button.
- An algorithm produces a rate and a set of available carriers that meet your requirements.
- When the carrier accepts your load, the shipment details and documentation are sent electronically to the driver. The load is tracked using a mobile app on the driver’s mobile device, and status and exception alerts are available by text or email. There’s no need for anyone to place a phone call unless there’s an issue.
- When you get your electronic invoice, you can pay for the shipment by credit card.
The core challenge for digital brokers is no different than any other broker: in order to cover every load, they need significant scale and relationships with vetted carriers and drivers. Currently, most digital brokers source their capacity from traditional online load boards and the spot truckload freight market.
Digital brokers have been compared to ride-hailing services in terms of their potential to transform commercial trucking. Companies like Lyft succeeded by creating new capacity—suddenly, anyone with a car could go out and earn extra money with a fairly low barrier to entry. Digital freight brokers can’t generate more truckload capacity by themselves; they draw from the same pool of available trucks as everyone else.
But that’s also changing…
In June 2019, a digital freight broker teamed up with a developer of self-driving trucks to complete what they say is the first fully autonomous dispatch and delivery of freight. A shipper used the broker’s online booking engine to hire a carrier to haul load of corn in Texas. The system calculated a rate and then dispatched a self-driving truck to do the job with no phone calls or human interaction.
3. Digital Workflows
Better load visibility and streamlined load tendering are the building blocks of a more efficient digital workflow. The next steps are to automate paper-based processes and manual tasks to make exchanging documents with carriers and drivers fast, accurate, and secure.
Here are four examples:
- Document Capture: With the right hardware and software, 3PLs and freight brokers can receive, digitize, and electronically catalog carrier documents in their TMS using one consistent format. The result is speedier cash flow through decreased billing timeframes and DSO (days sales outstanding).
- Data Extraction: Optical character recognition (OCR) technology can verify different types of trip documents, extract the data, and reconcile shipment details with shipment documentation.
- Automated Invoicing: Automated invoice workflows make it easier to generate and distribute invoices quickly and with the right supporting documents. It’s also possible to automate the validation of receipts for lumper services, accessorial fees, and other chargeable expenses.
- Payment Processing: Payment processing automation can eliminate back-office work and optimize cash flow. It can also support Quick Pay, so brokers can pay carriers faster than the normal pay cycle for a discount. Quick Pay is convenient because the dispatched load and payment come from the same source, and there’s no contract or minimum volume because the factoring arrangement is between the broker and factoring company. Many freight brokers will indicate that a load is credit-approved and available for Quick Pay when they post it to a load board.
Providing shippers with clear, complete, and accurate invoices, bills of ladings, lumper receipts, detention time, and other records is essential to making sure funds can be issued to carriers quickly and without hang-ups.
If there’s one way to ensure that you have capacity you need, it’s to operate in a business ecosystem that’s built for transparency and collaboration with carriers and drivers alike. With more freight visibility, streamlined load tendering, and a digital workflow, you can create more efficient supply chains for your customers and better relationships with the people who haul their freight.