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.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.