The transportation industry is a vast network covering all major modes of transport such as road, rail, sea, and air, transporting both cargo and passengers.
The freight transportation market is one of the largest industries in the world moving goods valued more than USD4 trillion, in some cases accounting for 10% of GDP with an average growth rate of around 7% annually.
US alone moves in excess of 10.5 billion tons of freight annually, uses over 3.6 million heavy-duty trucks, and employs more than 3.5 million truck drivers consuming almost 39 billion gallons of fuel.
Such a volume of movement naturally generates enormous amounts of data, but that’s not a bad thing: this Big Data can be used to the advantage of all role players in the LTL freight transport industry – carriers, shippers, receivers, brokers, insurance companies, terminals, software developers etc.
Why the Need for Freight Data?
Here are a few compelling reasons why freight data is useful:
- Monitoring various transport metrics
- Average transit time
- Inbound and outbound freight costs
- Identify efficiency of the selected mode
- Percentage of on-time pickups and deliveries
- Create efficiencies in transportation operations
- Demand forecasting
- Real-time visibility into transportation performance and cost
- Identify and create opportunities in new markets
- Optimize modal and intermodal choices
- Transportation safety and security
- Understand the environmental impact
- Lower shipping costs and reduce transportation spend
But just tracking data is not going to provide the efficiencies you need. It has to be coupled with setting goals, understanding the measured metrics, and taking quick and decisive actions based on the data.
How Is Freight Data Collected?
For starters, whichever LTL carrier you are booking with will be using a TMS (Transport Management System) to manage your shipments and you may already be using their TMS to make your bookings. In order to use their systems, you will be setting up a shipping profile with your service providers. A shipping profile allows the carrier to understand your shipping preferences, size and volume of your shipments, routes, total price, price per pound, average price, average weight, and everything else they need to know about your business so they can support you.
This is also a great way to get rid of any redundant shipping settings you may have had in their shipping system. You can also list the various items you ship so all your listings are connected to your profile and are available to the carrier at any time.
You are basically giving them information that they can analyze, resulting in better customer service and pricing.
Service providers generate and combine data from your shipping profile such as historical activity, CRM data etc, along with advanced technologies such as machine-to-machine data (truck sensors, RFID chips, GPS etc), geolocation, geocoding, IP trackers, and street map data.
How Do Freight Shipping Carriers Utilize Your Data?
Broadly speaking, your LTL carriers and freight brokers use this data to ensure that they provide the most competitive shipping rates and services based on your shipping profile.
The usage of the data collected allows the carriers to optimize your delivery system, identify and understand the bottlenecks in your logistics network, create, use, track and compare a wide range of algorithms, and build the best solution for your transportation needs.
By linking your historical activity data to your shipping profile, current market economic indicators, and geomarket data, the carriers and 3PL service providers are able to predict demand, anticipate daily volumes, optimize delivery routes, and allocate resources to deliver services efficiently and within budget.
By using the data efficiently, carriers are also able to create a dynamic pricing model as they can use the data to factor in cost-sensitive components and external data relating to weather patterns, transit time etc. to arrive at an optimized price which they could pass on to you as the customer. Such dynamic pricing also helps you to create a balance between the pricing to your customers and your shipping costs.
Obviously, knowing you will share data with your freight carrier, you have to make sure that you choose the right partner. A carrier has a considerable impact on your day-to-day operations and consequently, your business. Therefore, it is important to ensure that you do your due diligence and analyze and evaluate your options and select the companies that best meet all your supply chain demands.
In general, you want to work with more than one carrier because
- you may not get all your needs addressed by one carrier,
- it’s prudent to spread your risk,
- competition keeps them accountable.
In some instances, employing the services of a freight carrier that can handle all your requirements makes more commercial sense. You may also consider employing the services of 3PL service providers who can also assist with freight bill audits, parcel contract negotiation, and overall better decision making.
Final Thoughts on Freight Data
Whether you are a shipper, buyer, freight broker or 3PL service provider, getting your goods/your customers goods on time to the final destination, in the same condition they were picked up, and in a cost-effective manner is the essence of the whole freight transport industry.
A freight carrier that leverages the data available, whether it comes from you through your shipping profile or other technical sources discussed above, stands a great chance of achieving this objective. Your big data is what makes supply chain management possible. It is what tells you when you need your inventory or stock before you know about it. It is what guides you in making tactical decisions such as identification and appointment of reliable freight shipping carriers, understanding their capabilities and reliability. It is what helps you consolidate all required information from multiple sources and enables you to make predictions and take real-time decisions to keep your LTL shipments moving.
Are your freight contracts fully optimized? We wager they are not as much as you think.