It's hard to believe, but the midway point of 2021 has already arrived. And given how hectic the first half of the year has been for freight procurement and logistics pros, the second half of the year is likely to be just as busy and disruptive. With that in mind, let’s take a look ahead at the major stories that could define the second half of the year for freight procurement. Summer Exacerbates Capacity Woes Capacity has been an issue throughout the COVID-19 pandemic, and the fact that summer is approaching-- a period when there are notorious capacity crunches even during “normal” times-- isn’t going to help. Therefore, shippers will continue to see high tender rejection rates from contracted carriers. And to succeed, they'll need an agile approach to supplementing their primary network and sourcing out-of-network capacity. Brokers Fees Shoot Up Compounding the capacity crisis that will likely take place over the next several months is the fact that broker fees are set to rise in tandem. Brokers are renowned for transparency issues and high fees, and they surely won’t miss an opportunity such as this to slap a hefty margin on top of already high procurement costs. Thus, shippers need to be even more wary of the broker market than usual and find ways to work directly with carriers to yield true market cost {fair truckload pricing} and above average OTD. Technology, powered by AI, helps shippers circumvent brokers to find the perfect carrier for every load. Freight Procurement Looks to Tech Accessorials, capacity planning, and tender management: these are just a few things that freight procurement professionals and shippers are tasked...
Nurturing a good relationship with partners is pivotal in freight procurement, but in hectic times such as these, ironclad customer loyalty can be the difference between whether a shipper or logistics company is in the red or the black. That said, maintaining strong partnerships in freight procurement can be easier said than done. With that, here are a few missteps that shippers and logistics companies need to avoid so that they can put their best foot forward when looking to build long-term, sustainable relationships. Prioritize Transparency Transparency has long been one of the foremost issues in freight procurement. For example, real-time data is central to making the best decisions possible today, yet, brokers and other third-party vendors routinely only provide an infinitesimal amount of data to shippers. This undercuts trust and doesn’t set the stage for a long-term partnership. Therefore, companies that provide transparency to customers stand in far better stead than those that do not. Static Engagement Partners always want to feel like a relationship is strong and driving great results. Unfortunately, in freight procurement, oftentimes companies settle for current success instead of always trying to improve. For example, instead of looking to cut freight costs, even more, vendors will rest on their laurels and not try to drive further savings for their customers. This is a huge mistake. Relationships are dynamic, not static, and therefore partners need to constantly think about how they can continue to innovate and break new ground. Clear KPIs and Targets No two partner’s KPIs are exactly the same in freight procurement. However, there is often misalignment in terms of what exactly should be judged as success and why....
In a world where data and transparency are driving groundbreaking results, freight procurement is one vertical, in particular, that’s still operating in the dark. And while categories such as retail, healthcare, insurance, and many others are raving about the number of insights they’re receiving -- and the “glass box” they’re operating in regarding data -- shippers and carriers are still blindly looking for ways to operate with minimal insights to work with. Needless to say, they’ve gotten tired of this state of affairs. Shippers and carriers deserve better from their partners regarding data transparency. Yet, brokers continue to stonewall inquiries around transparency and data. Here are the key areas where brokers are blocking out the sun when it comes to data transparency, and why it’s hurting shippers and carriers. On-time delivery Brokers would like shippers to think they constantly have their fingers on the pulse around alternate freight options, and that when they pick up a load they have an asset in hand. Unfortunately, this is rarely the case and it can sometimes take hours to lock in an alternate. This is simply unacceptable, especially when OTD delivery is supposed to be a key priority for brokers. On top of these delays, brokers provide virtually no visibility or feedback about how close they are to locking in an alternate until it’s secured. This means that shippers are totally left to the whim of the broker. Market value For shippers and carriers, it’s key to know what the market value is for a given lane. However, this is again virtually impossible to do when relying on brokers. Instead of providing clear, itemized data about...
As the technology revolution has taken hold, AI and data science have become indispensable tools for freight procurement and logistics management businesses when it comes to boosting their efficiency and revenue. Yet, while many “old school” procurement and logistics processes have been overhauled using modern computing tools, one process continues to be stuck in yesteryear: freight tendering! Manufacturers spend more than $1 trillion on shipping each year, yet many continue to rely on a static tender process for freight procurement that not only makes it incredibly challenging to manage freight costs, but is also fraught with transparency issues. With that in mind, here are a few ways that the static tender process is undercutting shipper freight budgets and performance, and why the time has come to swap it in for something more dynamic. Lost Efficiency and Lowered OTD Performance Relying on the static tender process can have significant consequences on a shipper’s efficiency and on-time delivery rates (OTD). For example, when a primary carrier rejects a load, it could be hours before either a secondary or tertiary carrier accepts the load, or a broker is able to lock in an alternate carrier. This means that not only has a shipper’s supply chain been gummed up for hours but that the OTD of that load may be seriously at risk. With dynamic solutions powered by AI and data science, however, shippers can quickly tender a load to asset-based, complaint, out-of-network alternates, thus dramatically cutting down on the amount of time a rejected load is left sitting unshipped and maintaining OTD success rates. Cost Overages In addition to the OTD ramifications, relying...
Much like in many business verticals, understanding supply and demand in logistics is pivotal to making sound, profitable decisions. Unfortunately, thanks to the data gaps and other hurdles that exist in the logistics space today, understanding supply and demand in freight procurement is incredibly tough to nail down. But this doesn’t have to be the case. Here are a few ways to crack the supply and demand code: Prioritizing Supply and Demand Shipping loads with no foresight into carrier capacity can result in huge financial waste for shippers. Wouldn’t it be great if shippers could optimize their shipping operations around when carrier capacity is high so shippers avoid paying higher fees? Unfortunately, most shippers need to ship products regularly because sales orders need to be fulfilled. Granted, having solid historical insight into how trucking costs shift throughout the year helps shippers forecast truckload costs, but unplanned disruptions can and will throw trucking cost trends out the window. So having real-time rate data that shows if and when trucking costs are shifting is most ideal. Becoming Data-Centric Logistics and freight procurement are two of the slowest moving categories when it comes to technology adoption. However, to overcome supply and demand hurdles, shippers need to find ways to leverage first-party data, along with carrier data, so that they can understand what the market looks like in terms of capacity. This means trading in outdated practices like Excel spreadsheets or relying solely on murky broker market data for dynamic data-driven solutions that can provide them with the insights they need to make better business decisions. Knuckling Down on Brokers The broker market is incredibly challenging to deal...
Although data continues to help proliferate the supply chain, making companies more agile and boosting revenue, there’s one critical area that has lagged behind: logistics. Shippers use data to measure when products are picked up and dropped off and where a shipment is along a given route. But this data only tells half the story, which means logistics managers are missing key insights in order to drive efficiency across freight procurement operations. From on-time delivery (OTD) to freight cost measurement, there are massive gaps within freight procurement. However, with the right technology, shippers can gain the insights needed to optimize this critical process within the ever-so-important supply chain. Here are a few areas where data gaps currently exist, and what shippers and carriers can do to help fill the gaps. Supply & Demand The freight procurement process has remained unchanged for decades. When contracted carriers reject a shipment, shippers turn to the broker market. Unfortunately, brokers were never in the business to share data. Brokers don't want shippers to know the current supply and demand landscape, and what the carrier is asking for to haul a load (we define this as true market cost). To overcome this, shippers and carriers are using Data Science tools, such as AI, to track supply and demand to gain a better sense of freight market conditions. Market Rate Cost Understanding the true market cost to haul a specific load/ lane is another major data gap. For example, a broker's hidden margin is added into a shipper's total cost per load, so the shipper never knows how much the broker versus the carrier is making. In essence,...