Freight markets have been roiled by the pandemic-driven recession in recent months, adding to long-term challenges like wide swings in capacity, driver shortages, and thin profit margins. But amid that turbulence, logistics software providers say they may have found a way to capture new efficiencies by integrating their transportation management system (TMS) platforms with digital freight-matching (DFM) apps.
The two software tools take different approaches to addressing those pain points, with TMS products offering a centralized hub of information, while DFM apps use a distributed web of smartphones to match shippers in need of freight service with truckers that can provide it. But the combination of the two can tap into the best of both worlds, according to several logistics technology vendors who have recently built such integrations.
TMS software, of course, has been around for decades, enabling shippers and third-party logistics service providers (3PLs) to find carriers and book loads. But the technology has never been more important than it is today, when users are increasingly relying on their TMS tools to reduce costs; improve internal productivity, efficiency, and customer service; increase visibility; and make better use of capacity, according to the research and analyst firm Gartner. Those factors are set to drive global spending on TMS applications to $1.94 billion by 2022, Gartner says.
In contrast, DFM mobile apps have emerged over the past five years, fueled by venture capital investment and the emergence of the smartphones now found in nearly every trucker’s pocket. Their premise is that matching carriers with shippers can be done more efficiently with artificial intelligence (AI) and digital networks than by human freight brokers relying on emails and phone calls.
Now, in the latest iteration of freight technology tools, TMS and DFM providers are joining forces by building bridges between their platforms, saying they can speed up the contracting process by exchanging data instantaneously, thus creating marketplaces where shippers and carriers can find their perfect match.
“It’s about connecting the communities of carriers and shippers, both for contracted rates and for spot rates when you need additional capacity,” says Dave Lemont, vice president and general manager at Kuebix, a TMS vendor that announced in June it had integrated its software with DFM firm Loadsmart’s freight platform. As part of their collaboration, the developers created an application programming interface (API) that automatically provides live Loadsmart freight rates to any Kuebix user looking for a truckload spot quote.
Kuebix says the deal benefits its current customers by making its platform more of a “one-stop shop.” “Customers really want one place to manage all of their freight, [whether] they’re doing less-than-truckload (LTL), full truckload, international, or parcel. We don’t want to make people learn a second interface and print out reports from a second source. That’s why travelers go to Expedia to book plane tickets instead of visiting the American Airlines site only,” Lemont says.
The combined approach also helps the digital freight-matching providers, he adds. “DFMs have been approaching the TMS providers because capacity doesn’t do you any good without a shipper, and who has the shippers with loads to move? They want access to TMS platforms’ customers,” he says. “The fewer middlemen in the world, the better.”
Costa Mesa, California-based TMS vendor Teknowlogi shares a similar vision of a streamlined freight-matching process, citing that goal as one of the reasons it expanded its collaboration with the DFM firm Trucker Tools in February. The arrangement will provide Teknowlogi’s TMS customers with an improved predictive freight-matching and -booking process, let them secure available truck capacity faster, and “improve engagement” with truckload service providers, the firms said at the time.
“People look to our TMS because they are trying to get a lane covered as fast as possible [and do it] without leaving the TMS,” says Sean McGillicuddy, marketing director for Teknowlogi.
Historically, that task has been relatively simple in the LTL sector, which is dominated by a few large players such as FedEx Corp., UPS Inc., Estes Express Lines, Old Dominion Freight Line, and XPO Logistics Inc., McGillicuddy says. Those large carriers have the resources to build their own software and connect it to TMS platforms with the help of specialized software engineers. However, freight booking is much harder for shippers seeking capacity in the truckload sector, where as many as 90% of trucks belong to fleets of 10 or fewer vehicles, McGillicuddy says. That fragmented market makes it challenging to find carriers, commit to rates, and track loads.
By striking deals with DFM providers whose software apps have been downloaded by thousands of individual drivers, TMS vendors can instantly expand their customers’ access to those small fleets. “As these apps get more and more sophisticated, trucking companies’ adoption of them makes it possible for them to keep up with where the industry’s going, which is automation, shipment visibility, and AI,” McGillicuddy says.
Improving automation was also one of the key aims of Scottsdale, Arizona-based supply chain technology vendor Blue Yonder when it struck an agreement to integrate its TMS with DFM pioneer Uber Freight’s platform in July.
Digital transformation initiatives have accelerated over the last few months, as shippers embrace flexible operations to keep up with shifting demand, Blue Yonder said in a press release announcing the partnership. The move ensures that shippers can tap into real-time services and a reliable capacity network, using a dynamic “pricing discovery” solution to obtain instant price quotes and book loads up to two weeks in advance, the company said at the time.
According to Blue Yonder, shippers and 3PLs often complain about the manually intensive freight-booking process. Offering access to carrier marketplaces—another term for DFM apps—can streamline the process by providing live rates and real-time capacity information at the outset, instead of forcing users to go through the usual routine of contacting their primary carriers, then defaulting to their backup carriers, and finally resorting to the expensive spot market.
That improved procedure can be particularly valuable for smaller shippers that lack the resources that are available to their larger competitors, says Keith Whalen, vice president of product management at Blue Yonder.
“We have a wide variety of shippers and 3PLs, ranging from large manufacturers and retailers and some of largest 3PLs around the globe, to shippers that don’t necessarily have these huge freight spends,” Whalen says. “So we saw an opportunity to offer access to marketplaces, dynamic rates, and capacity, especially for those smaller users without an annual upfront procurement cycle.”
The recent flurry of partnerships between established TMS developers and DFM startup firms will benefit all of the parties in the freight-booking process, the companies say.
By providing broad access to shared information, the enhanced offerings can expedite the process of matching shippers in need of freight service with truckers that can provide it. At the same time, they automate what has traditionally been a labor-intensive activity and create one-stop shops where users can complete multistep tasks on a single platform, according to the vendors.
And their timing couldn’t be better. Arriving in an era when the coronavirus pandemic is exerting unprecedented pressure on participants throughout the supply chain, those improvements could be a welcome change for shippers and carriers alike.