Transparency and Freight Procurement: The Biggest Pain Points
One of the biggest catalysts for shipping success is transparency. Yet, there is a massive lack of transparency-- for shippers and carriers-- thanks to limited technology and non-transparent middlemen. This simply has to change. Here are a few freight procurement areas that are currently undercut by transparency.
Right now more than ever, it’s imperative that manufacturers, retailers, and distributors know exactly where every dollar is going. The pandemic is still a major issue, and margins are stretched thin. The supply chain offers many areas of opportunity to drive down costs, especially in truckload freight procurement. Currently, primary carrier acceptance rates are at all-time lows, (dry & van is 67%, and reefer is 58%), which means a large percentage of freight passes through to brokers and the spot market. When this happens, truckload costs increase by 18-40% due in part to hidden fees paid to a middleman-- not the actual carrier hauling the freight. Technology now makes it possible for shippers to eliminate the need for freight brokers and avoid spot altogether, which helps avoid massive cost increases.
To generate revenue, shippers must keep customers happy. So when it comes to transportation and logistics, a major success metric is OTD which stands for on-time delivery. If goods arrive late, there is a chance that penalties will be incurred (OTIF), or that orders will be canceled. Unfortunately, freight middlemen aren't typically proactive in keeping shippers up-to-date on load status, which makes it difficult to manage communications with end customers, especially when shipments run late.
Carrier Performance and Reliability
Truckload freight procurement is not just about picking goods up and dropping goods off on time; it also includes delivering undamaged goods to the intended destination. A carrier can have great rates and deliver things on time, but that’s all meaningless if shipments don’t arrive in top quality. The easiest way for a shipper to circumvent poor carrier performance is to only source known carriers who have a successful track record hauling loads that match the shipper's specific load attributes. AL and machine learning tools now make it possible for shippers to dynamically match load attributes with a qualified asset-based carrier.