Transportation sourcing is always a challenge in times of scarcity. But today's trucking market — with its unprecedented demand for capacity — has many shippers frantic.
Carriers are going to market earlier — and more frequently — than ever before to meet their capacity needs. RFPs increased by 1,000 year-over-year between July 2017 and July 2018, according to Transporeon Group's transportation sourcing platform.
This increase is not an irregularity, but a symptom of the record-setting levels of demand for domestic road transportation. Added to that, shippers are going out to bid earlier than in previous years. As of October, the number of RFPs through the system was still significantly higher than for the same period last year, with a 26-percent increase year-over-year.
Technology is the greatest enabler of collaboration. When it comes to domestic transportation, collaborative technology solutions allow everyone — the shipper, their carriers and their customers — to thrive, even in a challenging capacity environment. These solutions often help by automating processes relating to transportation and help to keep drivers on the road by minimizing detention and dwell time, and also allow drivers to stay in line with Hours of Service regulations.
Efficiency-enhancing technology helps to free up capacity by allowing everyone to do more with less. The most common implementations of technology are simply re-imagining existing concepts and processes in a digital form, which cuts down on the amount of resources required to execute. Real organizational change very often comes down to making the case for and then implementing process automation technologies in the transportation category as part of the cycle of continuous improvement.
In the coming years, full truckload shippers will be able to leverage “big data” from transportation management platforms to match demand up with free capacity. Shippers will be able to define a radius and time span by comparing a loading date (open transport) and unloading date (assigned transport), and will be matched with empty carriers within the radius to virtually eliminate expensive and inefficient deadhead runs. Collaborative technologies will help minimize empty miles by revealing backhaul opportunities, giving carriers the ability to plan more efficiently and help combat some of the inefficiencies that have contributed to the current capacity situation.
Shippers must also take steps to implement efficiency-building technologies and processes that can increase the likelihood of securing load offers in times of capacity shortages. Solutions like dynamic time slot management created specifically to handle complex loading logic or drop trailer programs can help shippers share realistic schedules with their carriers. When carriers are able to plan more precise time commitments at shipper premises and shippers honor those time commitments, carrier idle times are significantly reduced, which helps free up capacity.
Looking a little further ahead, there is increasing interest in the concept of digital shipping exchanges. These exchanges offer shippers and carriers alike the ability to enter into enforceable contracts. Once the agreement is registered on the exchange, the contract is stored as a future and may be exited or traded to another party provided both original parties are in consensus.
The benefits to each of the parties are immediate in that shippers are guaranteed capacity, allowing them to ensure on-time delivery to their customers. Carriers are getting accurate, committed volume information from their customers, enabling better planning. The exchange exists to record the transaction and ensure the enforcement of the agreement. Precedent already exists for these concepts in both the international (ocean) and domestic (truckload) space, but the implementations are still in the early phases.
As time goes by, and the use cases are demonstrated and recognized by more parties in the transportation procurement industry by buyers and sellers alike, we expect the adoption of these technologies to rapidly increase due to the inherent guarantees on both sides.
Patrick Pretorius is director of business development for North America at Transporeon Group.
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