Thirty years ago truck drivers had two-way radios to communicate with the terminals and sales people used pages for immediate contact. Most information was passed back and forth on a stack of paperwork. I know because I was there! I started working on a loading dock when my wife was pregnant with our first child.
Freight is a simple concept. Pick up the stuff and deliver it to where it needs to go; don’t lose it, don’t break it, and charge the agreed upon price.
The concept is simple, but execution is challenging. Today it goes by many names, Supply Chain, Logistics, Transportation, but they all mean the same thing: moving freight to where it needs to go.
When I started in the transportation industry, those stacks of paperwork were vitally important. They are called Bill of Ladings (BOL for short) and they identify the products being transported and the terms of the sale, who is responsible for what, the name of the payers and payees, and the company moving the goods.
Truck terminals had clerks that manually typed and transferred the information from the BOL’s to another paper bill that would travel with the freight and today is used as a delivery receipt or POD (proof of delivery). When I worked on the dock I remember being handed slips of these bills which identified the freight. We would read the bills, identify the pieces and weight of the shipment then make sure the pieces were identified and placed in the right trailer, safely.
Today’s warehouse and dock technology utilize scanners that are hand-held or mounted on tow motors. The scanners make it almost impossible to put a piece of freight in the wrong trailer.
We can also process “paperwork” much quicker and more accurately today. Our mobile devices allow the scanning of documents such as BOLs and PODs, which can then be sent directly to the intended recipient.
I expect to be able to look at my phone and see what’s going on with my deliveries, don’t you?
The Future of Logistics
The future of transportation is guided by developments in how consumers behave and how technology is enabling those drastic supply chain changes. People want to buy things without friction, and quickly. Technology is creating the ability for visibility and speed in how we do things.
In my short time in this business consumer patterns have changed drastically. Retail has changed to ecommerce, and now there is multi-channel too. Businesses that don’t change and grow will die. Retail giants like ToysRUs, K-Mart, and Block-Buster video are GONE. They were not nimble and did not keep up with the market changes and demands of consumers.
Meanwhile Amazon and Netflix have grown tremendously. Competition either strengthens a company or kills it.
It’s easy to overlook how cell phones have impacted our world in such a short time. Purchasing goods on an item in our pocket has significantly changed supply chains, as consumers are buying both small and large items and quantities for home delivery. That’s why we see so many sprinter vans for Amazon, and the proliferation of FedEx and UPS. That is a BIG change and only one example.
Location is Everything
Amazon is building so many warehouses that it’s causing a steel shortage for smaller builders. That’s a supply chain problem of its own.
Why are they building so much? Because location is everything in transportation networks. It’s important to have goods near the people, warehouses are popping up in markets so that distribution networks are easier to manage.
30 years ago when I worked for Carolina Freight, we had a Super Hub in Carlisle, PA. At the time, it was the biggest of its kind. It allowed us to offer faster transit times than most of our competition. The Carolina terminals in Allentown, Charlotte, Chicago, Nashville, and Jacksonville all loaded out of Carlisle, PA. It made for consistent runs between those points and Carlisle and eliminated many OSD (over, short or damaged) claims.
Today, carriers have the ability to load “terminal to terminal” and in many cases there are carriers that have a “load to deliver” model, which l allows carriers to by-pass terminal facilities all together. This can happen because the information (there is a lot of it) is managed by technology. Load and routing optimization allows load planners and operations staff to build and design load patterns that meet customer’s needs while keeping in mind the hours of service requirements for drivers.
I mention this now because when I started, the planners would use the pieces of paper and do the math to make sure the loads were built correctly.
Procurement is a Pain
Truck capacity is tight right now. That means that it is difficult for a shipper to get their loads covered consistently, and it tends to be much more expensive than it was two years ago.
Shippers secure capacity by putting out bids, also known as RFQ’s (request for quote) and RFP’s (request for proposal). This process runs largely on Excel files and emails, which is outdated, time consuming, and leads to mistakes. The biggest problem is the delay – there can be three or for months between a carrier submitting pricing and that pricing taking effect. That’s too long because the rates and capacity of today will almost certainly be outdated in three months. The market changes so quickly that capacity may not be available next week!
There is a real cost to shippers for not securing this capacity. The costs include paying high spot rates. Spot rates happen when a shipper cannot cover freight with a contracted carrier, so they turn to the brokerage market. Service levels deteriorate significantly too. Usually poor service leads to late deliveries, which lead to a chargeback or fine from the shipper’s customer.
Shippers need to be nimble. They need to secure capacity to meet the needs of their business but also to complement the network of their partner carriers. This allows them to get trucks at pricing levels that are sustainable and predictable.
The industry is ripe for transformation and it is coming! What we see today is technology emerging that allows shippers to go to market and procure transportation solutions that make sense for their business quickly. The early bird gets the worm! I see too many spreadsheets being sent to carriers and providers and ask for pricing. There is a better way.
Technology is changing the procurement process for shippers, which will continue to change dynamically for the next few years as the best technologies win out and the industry settles on new best practices for securing capacity. While this may not be noticed by consumers, it will save headaches and hassle for decision makers throughout the industry.
Consumers are driving changes to networks and creating a need for more facilities. It’s ironic that some of the people who complain about a new warehouse coming into their neighborhood simultaneously order new from their phone for home delivery almost constantly. The latter creates the need for the former.
No matter the changes in technology and consumer expectations, the concept of moving freight is the same. Pick it up and deliver it on time, on budget, without damage; this is done with trucks over 70% of the time. Trucks are NOT going away, despite the talk about autonomous vehicles and the challenges the industry faces with a very real driver shortage.
The transportation industry is still very much a people business. We know and trust experts to guide us to use good business strategies and practices. I am thankful that I know enough people to point me and my clients in the right direction to help make them more successful.
After three decades working in freight, and 14 years working for myself, I have learned the necessity of relationships through it all. While technology is important, trust is earned and kept by people talking with people.