TL Logistics Management Software – Is it Right For Your Company?

To those not familiar with the shipping process, transporting goods from one point to another can seem as simple as partnering with any given carrier. But for those who are familiar with the process, especially companies that ship on a regular basis, achieving an optimal shipping arrangement is understood to be as difficult as it is. However, the larger a company grows and the more goods it ships, the more opportunities it has to save money through shipping arrangements, one of which is truckload (TL) shipping, where a company ships full semi trailers of goods direct to destination, improving delivery time and reducing shipping costs by avoiding warehousing and freight handling fees.

To discover whether TL shipping is an option for your company is as simple as determining whether you ship enough goods to, when packaged and loaded properly, full semi trailer. But ensuring that you arrive at the best form of truckload transportation management can be more difficult, as companies are generally presented with three options when attempting to achieve the best oversight of their TL shipping process: hiring an in house logistics expert; contracting with a third party logistics provider; or implementing TL logistics management software-also known as truckload logistics software-which performs the work of a logistics expert and lets companies choose from among ranked TL shipping options through a user friendly interface.

As one might expect, the preference of most companies is to have their own logistics expert, especially considering that the biggest complaint of 3PL customers is the distance between the provider and the customer, leaving customers feeling as if they have little control over their own shipping process, which is somewhat true. Regardless of the type of 3PL provider a company contracts with (standard 3PL provider, service developer, customer developer, or customer adapter), the provider assumes control of a certain part or the entire function of the shipping process. Yet, many companies feel compelled to contract with 3PLs that offer singular services-with TL shipping being one of them-to save money on the shipping process.

Compared to the $70,000-$90,000 salary earned by experienced logistics experts, contracting with a standard 3PL provider or a service developer, both of which offer particular services instead of a comprehensive approach to the shipping process, costs less. But the savings often come at price: not realizing a meaningful range of TL shipping solutions. In many cases, standard 3PL providers and service developers place their customers with carriers that offer a discounted shipping rate to the 3PL, which the 3PL then charges the customer over and above to make a profit from the arrangement.

When companies grow tired of dealing with 3PLs for TL shipping solutions, they often turn to full truckload logistics software, which cuts the middleman out of the shipping process and lets a company become its own logistics provider. Upon implementing the software, companies save money by both eliminating the need for 3PL and realizing more cost effective shipping options, with research showing that companies can reduce the annual cost of their entire shipping process by 10 percent after only the first year.

TL Logistics Management Software is Essential to Cutting Shipping Costs

When companies grow large enough, they typically purchase their own shipping fleet and have a logistics department that manages their shipping process from a variety of vantage points. But for small to midsize companies that don’t have a shipping fleet or an in-house logistics team, carrying out and managing their shipping process means outsourcing their transportation logistics or trying to choose the right shipping options on their own. In most cases, these companies trust a third party logistics (3PL) provider to provide the best TL shipping solutions for their unique distribution needs. However, to save money and have more control over the shipping process, more and more companies are turning to truckload logistics software-also referred to as TL logistics management software. In addition to allowing small to midsize companies to become their own logistics provider, freight logistics software helps them save money with respect to the following areas of the shipping process: freight management, transportation execution and freight payment and audit.

Freight Management

Freight management amounts to managing each means freight distribution, including but not limited to: small parcel, less than truckload (LTL), full truckload (FTL), rail and sea. While large companies employ logistics professionals or construct internal freight councils, small companies typically either outsource freight management or defer to purchasing personnel or shipping or warehouse managers. By implementing TL logistics management software, companies realize more shipping options than they do from outsourcing to a 3PL provider. Because 3PL providers only use carriers that they can make the most money with, your shipping options with 3PL providers are limited to what makes the best sense for 3PL providers and not necessarily for your company.

Transportation Execution

Traditionally, transportation systems are designed for tendering outbound shipments, meaning that they aren’t designed for managing inbound and third party shipments. In addition, parcel carriers have compliance requirements that cause shippers to use a separate system for parcel processing, leading to higher freight costs. Ultimately, shippers have a difficult time keeping their freight from being tendered outside of their original pricing agreements and end up overpaying for freight transportation. To remedy this situation, TL logistics management software allows companies to enforce internal and external compliance throughout the shipping process with regard to the carrier pricing agreement.

Freight Payment and Audit

TL logistics management software allows you to combine your freight payment and pre-audit data, which gives you limitless reporting options concerning your freight spend. With the combined information uploaded to the software application’s dashboard to give you almost real time visibility of your freight spend, you can to monitor freight KPI’s on a daily basis to further control shipping costs as KPI’s change. The freight payment and auditing capabilities of truckload logistics software also allow you to receive more of your freight bills through EDI, which serves to lower your pre-audit costs.

How Freight Management Software Can Help Companies Compete Through Effective Pricing

Today’s manufacturing giants know that without an efficient logistics partner their distribution chain and speed to market will come to a grinding halt. Global logistics operations involve a complex web of vendors, warehouses, distribution centers, service operations, transportation routes and hubs which means that logistics services come at a steep cost at about four to five percent of total manufacturing costs. The complexity of global supply chains result in increased pressure on manufacturing margins. This pressure is passed on to logistics service providers who are in turn forced to offer competitive pricing models to secure the big ticket contracts, thus squeezing profit margins.

According to a new study conducted by the global strategy and marketing consultancy Simon-Kucher & Partners, price pressure is higher in the logistics industry than in other sectors. Logistics companies with strong pricing power achieve on average 17 percent higher margins than their competitors.

How can a Logistics Service Provider (LSP) catapult itself into a position where it is able to command a strong pricing power? Faced with the constant pressure of reducing costs without increasing logistics risk, LSPs can combat this by utilizing the right technology tools and freight management software for effectiveness as well as greater efficiency.

By deploying an effective freight management solution/software, LSPs can strengthen their market positioning by standing out from a crowd of ‘me-too’ service providers. Effective freight management technology solutions enable LSPs to offer not just differentiated but also superior services which puts them in a better position to command a price premium for value plus services. This greatly improves a company’s pricing power and guarantees international business success.

Another effective solution to leverage on a cost advantage is by using Cloud-based logistics management software. This ‘pay as you go’ model allows LSPs to drastically cut down on their hardware and technology acquisition costs. In addition, by offering simplified and automated services LSPs can reduce human errors, resulting in customers who are willing to pay a premium for a reliable and more effective logistics service.

New age freight management software that is developed by a specialist with a keen insight into the complexities of the logistics world and offers third party integration and single window access speeds up processes. Increased automation means reduced dependence on manpower costs which are forever escalating. By cutting down on operational costs, LSPs can compete with other companies and offer a competitive pricing structure along with a great service, an unbeatable combination that offers a win-win solution to LSPs as well as their customers.