Freight-rating software has become an indispensable tool for shippers and 3PLs in a capacity-constrained world. But choosing the right system is more than just a matter of price.
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
It may seem a misnomer to label a $35 billion-a-year industry a "niche market." Yet that's how companies that provide freight rating software services describe their business. It is a specialized, albeit mature, field populated by relatively few vendors. As freight users across all modes seek to maximize their shipping spend in an environment of tight carrier capacity and rate increases, rate comparison tools and the companies that develop them have become increasingly important.
The basic function of freight rating software is to match a user's shipping and freight characteristics with a carrier's price and service offerings, enabling shippers and third-party logistics service providers (3PLs) to conveniently shop around for the best rates from multiple carriers. Freight rating tools are designed to optimize the headhaul and backhaul components of a shipper's network, and deliver the analytics that shippers need during lane-by-lane rate negotiations with their carriers. "There is a bit of work involved on the shipper's part, but anyone trying to hold the line on freight expenses should certainly investigate its use," said James A. Cooke, principal analyst at Nucleus Research Inc., a research firm.
Most vendors specialize in a certain mode. For example, Kewill, a U.K. firm with U.S. headquarters in Chelmsford, Mass., is particularly visible in parcel. DAT Solutions, based in Portland, Ore., has a strong presence in the truckload space. Peachtree City, Ga.-based SMC3, which has developed a rating product called "RateWare," focuses on the less-than-truckload (LTL) market.
Madison, Wis.-based RateLinx touts its software, called "ShipLinx," as mode-agnostic, meaning it doesn't try to shoehorn a user into a particular mode. In the company's view, situations arise when the traditional weight "breaks" that often determine modal choice don't apply, and a shipper whose load might seem best suited to parcel shipment could actually fetch a better rate moving via LTL. ShipLinx will identify those anomalies and suggest ways a shipper can better leverage its shipping spend, said Shannon Vaillancourt, RateLinx's founder and president.
RateLinx sells its software exclusively to shippers because it is built to disintermediate 3PLs from a process that shippers can manage on their own, said Vaillancourt. He has no qualms about the strategy, saying that most intermediaries already view his company as a cost center rather than a solution provider. Many third parties "don't understand technology, and they don't deploy it well," he noted. That said, some of the bigger freight brokers offer rating software engines within their transportation management systems (TMS).
By contrast, DAT sells its rating product, called "Rateview," to both shippers and 3PLs, according to Mark Montague, industry pricing analyst for the firm. With an estimated $53 billion spent each year by 3PLs to purchase truck transportation on the non-contract, or "spot," market, DAT sees an enormous opportunity to provide freight rating tools to help intermediaries navigate what has become a challenging landscape in the past two years, Montague said. For shippers, Rateview is important because spot rates are a reliable indicator of what truckload rates will look like when shippers begin negotiating contracts with their carriers, DAT said.
SMC licenses its RateWare product to carriers, shippers, and third-party logistics companies. However, the group avoids performing carrier rate comparisons because it wishes to remain neutral, said Brad Gregory, senior vice president of marketing and software alliances. Technology providers like Oracle Corp., SAP SE, MercuryGate, JDA Software Group Inc., and LeanLogistics represent the largest portion of Rateware's business. They use Rateware within their respective TMS suites, Gregory said.
SMC works to pair Rateware with a product called "CarrierConnect," which it developed around 2000 to supply detailed carrier and transit time information on lane segments chosen by users. The organization is beta testing an updated version of "CarrierConnect" that provides users with specific delivery dates rather than just a range, Gregory said.
St. Louis-based Cass Information Systems Inc., a freight bill audit and payment service provider that disburses $38 billion in annual freight payments on behalf of its clients, also doesn't sell its software, which is called "Ratemaker." Instead, Cass uses it to verify the accuracy of freight charges during the auditing process, according to Don Pesek, director, audit and rating services.
WHAT TO SHOP FOR
As for what goes into choosing a freight rating system, a first step is for a user to determine if the software's objective is to select carriers or to determine the lowest freight charges. A second is to gauge if the pricing will be available through a licensing agreement or on a "software as a service" basis. Beyond those two fundamental elements, experts said there are a number of common-sense factors that users should consider when shopping for a solution. Eileen W. Hart, vice president of marketing and corporate communications for DAT, said users need to determine if the data source is reliable and that the data stream is as real-time as possible.
Vaillancourt of RateLinx said prospective users should consider whether the software can meet their needs across all modes of freight. They should also investigate how frequently their vendor will update the information (ShipLinx is auto-updated weekly) and how much maintenance they would have to perform themselves, he said.
Pesek of Cass said that a freight rating system should interface with leading enterprise resource planning (ERP) systems like those offered by Oracle and SAP. A platform should also support global transactions, a key feature as more companies expand into international commerce. "The system should be able to handle multiple [foreign] currencies," said Pesek, whose company is updating its own legacy systems to manage more overall transactions and to build capabilities needed to handle complex international transactions.
Gregory of SMC3 said that large LTL shippers using a TMS should ensure that the freight rating software works with the LTL tariffs that the users utilize. Shippers should also opt for a program that can crank out rates at a rapid pace, Gregory said. This is especially important if the rating software will be used to support a network optimization initiative, an intensive and complex exercise that potentially involves the analysis of millions of rate and route combinations.
In addition, the freight rating technology should be compatible with the core technology apparatus a user has in place, Gregory said, adding that a user should not have to re-invent its technology wheel to accommodate rating software.
For small LTL shippers that move a relative handful of loads each day, week, or month, Gregory recommends a simple rating program such as the one offered by Kansas City-based Freightquote.com, which was acquired late last year by C.H. Robinson Worldwide Inc., the Eden Prairie, Minn.-based freight brokerage and 3PL giant. A provider like Freightquote can give mom-and-pop users the rate comparisons they need without the cost of a full-fledged TMS, he said.
Editor's note: An earlier version of this story incorrectly stated that RateWare was not made available to shippers and carriers. It is licensed to those parties. DC Velocity regrets the error.
Online merchants should consider seven key factors about American consumers in order to optimize their sales and operations this holiday season, according to a report from DHL eCommerce.
First, many of the most powerful sales platforms are marketplaces. With nearly universal appeal, 99% of U.S. shoppers buy from marketplaces, ranked in popularity from Amazon (92%) to Walmart (68%), eBay (47%), Temu (32%), Etsy (28%), and Shein (21%).
Second, they use them often, with 61% of American shoppers buying online at least once a week. Among the most popular items are online clothing and footwear (63%), followed by consumer electronics (33%) and health supplements (30%).
Third, delivery is a crucial aspect of making the sale. Fully 94% of U.S. shoppers say delivery options influence where they shop online, and 45% of consumers abandon their baskets if their preferred delivery option is not offered.
That finding meshes with another report released this week, as a white paper from FedEx Corp. and Morning Consult said that 75% of consumers prioritize free shipping over fast shipping. Over half of those surveyed (57%) prioritize free shipping when making an online purchase, even more than finding the best prices (54%). In fact, 81% of shoppers are willing to increase their spending to meet a retailer’s free shipping threshold, FedEx said.
In additional findings from DHL, the Weston, Florida-based company found:
43% of Americans have an online shopping subscription, with pet food subscriptions being particularly popular (44% compared to 25% globally). Social Media Influence:
61% of shoppers use social media for shopping inspiration, and 26% have made a purchase directly on a social platform.
37% of Americans buy from online retailers in other countries, with 70% doing so at least once a month. Of the 49% of Americans who buy from abroad, most shop from China (64%), followed by the U.K. (29%), France (23%), Canada (15%), and Germany (13%).
While 58% of shoppers say sustainability is important, they are not necessarily willing to pay more for sustainable delivery options.
Schneider says its FreightPower platform now offers owner-operators significantly more access to Schneider’s range of freight options. That can help drivers to generate revenue and strengthen their business through: increased access to freight, high drop and hook rates of over 95% of loads, and a trip planning feature that calculates road miles.
“Collaborating with owner-operators is an important component in the success of our business and the reliable service we can provide customers, which is why the network has grown tremendously in the last 25 years,” Schneider Senior Vice President and General Manager of Truckload and Mexico John Bozec said in a release. "We want to invest in tools that support owner-operators in running and growing their businesses. With Schneider FreightPower, they gain access to better load management, increasing their productivity and revenue potential.”
Economic activity in the logistics industry continued its expansion streak in October, growing for the 11th straight month and reaching its highest level in two years, according to the most recent Logistics Managers’ Index report (LMI), released this week.
The LMI registered 58.9, up from 58.6 in September, and continued a run of moderate growth that began late in 2023. The LMI is a monthly measure of business activity across warehousing and transportation markets. A reading above 50 indicates expansion, and a reading below 50 indicates contraction.
October’s reading showed the fastest rate of expansion in the overall index since September of 2022, when the index hit 61.4. The results show that the industry is continuing its steady recovery from the volatility and sluggish freight market conditions that plagued the sector just after the Covid-19 pandemic, according to the LMI researchers.
“The big takeaway is that we’re continuing the slow, steady recovery,” said LMI researcher Zac Rogers, associate professor of supply chain management at Colorado State University. “I think, ultimately, it’s better to have the slow and steady recovery because it is more sustainable.”
All eight of the LMI’s indices grew during the month, with the Transportation Prices index showing the most growth, at nearly 6 points higher than September, reflecting increased activity across transportation markets. Transportation capacity expanded slightly during the month, remaining just above the 50-point threshold. Rogers said more capacity will enter the market if prices continue to rise, citing idle capacity across the market due to overbuilding during the pandemic years.
“Normally we don’t have this much slack in the market,” he said. “We overbuilt in 2021, so there’s more slack available to soak up this additional demand.”
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
The port worker strike that began yesterday on Canada’s west coast could cost that country $765 million a day in lost trade, according to the ALPS Marine analysis by Russell Group, a British data and analytics company.
Specifically, the labor strike at the ports of Vancouver, Prince Rupert, and Fraser-Surrey will hurt the commodities of furniture, metal products, meat products, aluminum, and clothing. But since the strike action is focused on stopping containers and general cargo, it will not slow operations in grain vessels or cruise ships, the firm said.
“The Canadian port strike is a microcosm of many of the issues that are impacting Western economies today; protection against automation, better work-life balance, and a cost-of-living crisis,” Russell Group Managing Director Suki Basi said in a release. “Taken together, these pressures are creating a cocktail of connected risk for countries, business, individuals and entire sectors such as marine insurance, which help to mitigate cargo exposures.”
The strike is also sending ripples through neighboring U.S. ports, which are hustling to absorb the diverted cargo, according to David Kamran, assistant vice president for Moody’s Ratings.
“The recurrence of strikes at Canadian seaports is positive for U.S. ports that may gain cargo throughput, depending on the strike duration,” Kamran said in a statement. “The current dispute at Vancouver is another example of the resistance of port unions to automation and the social risk involved with implementing these technologies. Persistent disruption in Canadian port access would strengthen the competitive position of US West Coast ports over the medium-term, as shippers seek to diversify cargo away from unreliable gateways.”
The strike is also affected rail movements, according to ocean cargo carrier Maersk. CN has stopped all international intermodal shipments bound for the west coast ports of Prince Rupert, Robbank, Centerm, Vanterm, and Fraser Surrey Docks. And CPKC has stopped acceptance of all export loads and pre-billed empties destined for Vancouver ports.
Connected with the turmoil, Maersk has suspended its import and export carrier demurrage and detention clock for most affected operations. The ultimate duration of the strike is unknown, but the situation is “rapidly evolving” as talks continue between the Longshore Workers Union (ILWU 514) and the British Columbia Maritime Employers Association (BCMEA), Maersk said.
Terms of the acquisition were not disclosed, but Mode Global said it will now assume Jillamy's comprehensive logistics and freight management solutions, while Jillamy's warehousing, packaging and fulfillment services remain unchanged. Under the agreement, Mode Global will gain more than 200 employees and add facilities in Pennsylvania, Arizona, Florida, Texas, Illinois, South Carolina, Maryland, and Ontario to its existing national footprint.
Chalfont, Pennsylvania-based Jillamy calls itself a 3PL provider with expertise in international freight, intermodal, less than truckload (LTL), consolidation, over the road truckload, partials, expedited, and air freight.
"We are excited to welcome the Jillamy freight team into the Mode Global family," Lance Malesh, Mode’s president and CEO, said in a release. "This acquisition represents a significant step forward in our growth strategy and aligns perfectly with Mode's strategic vision to expand our footprint, ensuring we remain at the forefront of the logistics industry. Joining forces with Jillamy enhances our service portfolio and provides our clients with more comprehensive and efficient logistics solutions."