Transportation management will evolve dramatically in 2018. The days of using simple technologies and manual processes are over, and shippers must evolve to maintain competitive advantage and provide superior customer service. In addition, the continued rise of freight trucking rates, as explained by James Jaillet of Overdrive Online, will demand newer, faster and more efficient transportation management systems (TMS). Fortunately, shippers can prepare for increasing prices by understanding these 5 top transportation management trends.
The Freight & Transportation Management Trends to Know in 2018
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1. Scalable Technology at the Heart of Transportation Management Trends
Not all transportation management platforms are created equally. They may have limitations on shipment processing, auditing and capacity, and scalable TMS solutions will continue to augment, if not replace, their limited legacy cousins. According to Mike Birge of HUB International, shippers will take all actions necessary to update and maintain technologies, including hiring either in-house resources of finding third-party experts who can handle integration of new web or cloud-based systems into legacy systems like ERP. Scalable technologies must be able to work in concert to give fuller visibility to transportation processes like contracts, or bills of lading, have automation in invoice auditing, focus on carrier data for more informed transportation procurement choices, and include the ability to handle the needs of e-commerce, last mile, and multi-mode comparison.
2. Collaboration Will Be the Focus of TMS and Shipper-Carrier Relationships.
The expanded us of a transportation management system integrated into legacy systems will aid in shippers getting out of the weeds of process and thus make shippers more strategic. A strategic mindset, and having more data that is valid and easy to analyze, will beget more collaboration between all the parties involved in transportation management. Imagine having conversations with carriers about your working relationship around real data instead of anecdotal feelings that can arise from exceptions to normal shipping. This strips away emotion and gets to the heart of where both parties can truly improve leading to increased capacity, as a carrier may now see you as a shipper of choice, reduced overall costs, and confidence you are utilizing the right carriers to get your freight to your customers on time, issue free. With technology adoption of TMS increasing among shippers, collaboration is one of the largest benefits seen in these top transportation management trends we lay out.
3. Safety and Regulatory Data Within Transportation Management Will Become Increasingly Public
Technology has led to an increase in visibility to transportation management practices, data, and regulation compliance for supply chain executives. Although recent regulation, like the ELD mandate or the updated hours or service regulations that hit a few years ago look like the responsibility of the carriers & trucking owner/operators, supply chain and transportation executives must also have awareness to the details of these regulations. Again, this is where collaboration is key between shippers, 3PLs, and carrier partners. At the end of the day, a customer who is not receiving freight on time isn’t going to blame the carrier, but the shipper. The more an executive has education around regulatory details and agencies, such as the National Transportation Safety Board (NTSB) and the Federal Motor Carrier Safety Administration (FMCSA), the better executives can lead their teams to work with carriers on navigating these new rules and thus come out looking transparent, compliant, and ahead of any issues that might come up with the adherence to these laws.
4. As the Economy Ramps Up Transportation Management Will Focus on Accounting Visibility
Since the 2016 election, the stock market has shown remarkable gains, the Trump Administration has rolled back regulation that has manufacturing and consumer confidence hitting record highs, and with a potential trillion dollar infrastructure plan being considered, shippers are confident in the future. But, like any smart investor, when the going is good, it’s also a great time to pay closer attention to financial planning. Transportation and supply chain executives will work with CFOs utilizing data gleaned from the use of a Transportation Management System integrated into an ERP to get a more complete look at total landed cost of transportation. Transportation budgets can represent 3 to 6% of total sales, and any way for a shipper to reduce total costs go right to the bottom line improving overall EBIDTA. That’s music to the CEO’s (and, for public companies, shareholders’) ears.
Now, it’s not all rosy for shippers as the economy ramps up. As noted by John Culp, Chief Financial Officer of Maverick Transportation, the odds of the country enduring a capacity crunch and crisis in the next 12 months stands at 70 percent, and it is inevitable within the next 24 months. The capacity crunch, the cloud hanging over all of these top transportation management trends, could make the quest of reducing overall costs due to rising rates we’re seeing from many carriers. Sales will increase, but any visibility into total landed costs by shippers will mitigate any percentage increases in transportation. If you can’t see or analyze data, it’s hard to change or affect costs in any way.
5. Expansion of Contract Carriers Will Complicate Management Systems and Processes
As e-commerce grows, requiring a shift towards last-mile solutions, demand on carriers will increase. These pressures have already generated rate increases among the nation’s top carriers, including UPS and FedEx, reports Nick Nowaczyk of Reveel. Both carriers announced freight rate increases of nearly 5 percent in December. Thanks to rising rates and a demand for last mile services, the use of contract carriers will increase throughout the year. Contract carriers may lack the technology necessary to integrate with shippers’ TMS software suites, asserts Road Scholar Transport. Therefore, transportation management may have to look for new ways to give contract carriers access to their own TMS solutions. Thus, adoption rates of TMS, even among small to mid-sized carriers, will increase.
Top Transportation Management Trends Indicate Stronger Competitive Advantage Is on the Way
These top transportation management trends point to increased use of technology leading to improved collaboration and a tighter look at internal processes to improve bottom lines. In short, shippers need to start prepping for change. The move toward more technology and detail-oriented systems will level the playing field for big and small carriers and shippers alike. This diminishes the value of existing competitive advantage, so shippers need to start rethinking strategies and improving transportation management process now to stay ahead of the curve.