Networking can help reduce freight costs and optimize processes for both shippers and transportation providers. “Collaborative commerce” is particularly worthwhile in the field of logistics.
Spot sourcing can reduce freight costs by up to 10 percent
Successful enterprise-wide solutions create efficiencies within the workflows they were designed to accommodate. One innovative example of this type of solution is shipment execution systems designed to spot source single loads. These collaborative systems enable transportation providers to efficiently find and organize backhauls or continuous-move traffic flows, which reduces empty miles for the carrier. Carrier cost savings are often reflected in lower freight prices, ultimately benefiting the shippers they service.
Since the introduction of shipment execution systems in the late 1990s, empty miles have decreased by about 6%, but additional optimization potential exists that can easily bring empty miles down by another 10%.
How it works
Carriers can be identified and booked without fixed contracts on a short-term basis by spot sourcing single loads to carriers with the best price-to-performance ratio using a shipment execution solution. In a capacity bottleneck situation, this type of assignment allows for flexible and efficient shipping, which can also reduce empty miles. It’s possible to leverage web-based logistics platforms to efficiently post a kind of “mini-tender” within a closed pool of carriers or to a wider group by using one of the public internet freight exchanges.
Deciding between a closed tender and an open freight exchange
For spot-market assignment, two different kinds of systems can be leveraged: a kind of “mini-tender” within an established pool of carriers or an online freight exchange accessible to all transport providers. The majority of shippers rely on closed systems in which proven partners ensure high quality of transportation service, but there are distinct advantages to open freight networks.