“Every year in the U.S alone, trucks drive enough ‘empty miles’ to reach Mars 350 times’’. In the UK, this equates to Road congestion costing 1% of GDP. ‘’It’s a colossal waste of time and money that hurts shippers, drivers, and the environment” – Drew McElroy, cofounder and CEO of Transfix
WHAT IS FREIGHT MANAGEMENT MEANT TO DO?
Freight Management aims to optimise the efficiency of freight movement, reducing transportation costs and increasing reliability. It allows companies to manage their international and domestic transportation by tackling supply chain complexity and monitoring the life-cycle of transportation. Many systems allow for direct integration to partner systems, which also improves the efficiency of these processes.
How? Tenders are usually completed, lanes selected, contracts awarded and then execution is monitored, and changes made based on detailed analysis of transportation data. Ultimately, this is all done manually.
For example, a typical scenario would include either inbound (procurement) or outbound (shipping) orders (or both), to be evaluated by a Planning Module offering the user various suggested routing solutions. In other cases, a planning team will either manually plan or re-evaluate what the system does based on their knowledge and visibility, before selecting the best mode and lowest cost provider/solution.
Unfortunately however, it is common to find that these operators work under strict time constraints, and so typically choose to work with only a small pool of providers. As there may be more competitive providers to choose from, this lack of objectivity risks increasing costs to the company.
Once the ‘best’ provider is manually selected, the shipper typically generates electronic load tendering, route planning and track/trace, to execute the optimised shipment with the selected carrier/s.
Virtually no other supply chain process offers so many different forms of optimisation. But despite the wide array of freight management tools, offering varying options for efficiency and automation, freight and transport management teams still struggle to meet their optimisation targets, because, because the existing technology is getting old, knowledge and experience are difficult to transfer or there is thought to be ‘’no other way of doing it’’…
There are very few supply chain applications that can fully automate all aspects of freight management, yet teams implementing them will still struggle to choose the optimum mix of technology. In part this is due to a lack of appropriate technology, but mostly because the team’s own knowledge, experience and preconceptions inhibit them from exploring new opportunities for better service, collaboration or cost savings.
“Every high performing supply chain is a digital supply chain. Digital technology is disrupting traditional operations and now every business is a digital business. Businesses cannot unlock the full potential of digital without reinventing their supply chain strategy.” – Accenture UK
And there is a lot to fix:
- The transport industry is perceived to be “inefficient, expensive, polluting and living in a pre-internet age”.
- Complex planning decisions are often made by the lowest salaried people with siloed knowledge and limited visibility of resources
- Trucks are empty > 25% of the time and this has not reduced in a decade 1
- Transport accounts for 20% of total emissions and uniquely is the only industry whose carbon footprint is still increasing 2
- Road congestion costs 1% of GDP 3, 4
- Shippers pay too much for transport, yet carriers make woeful returns (2013 Top 100 carriers’ average 3% net profit) 5
- The current link between volume and resource needed to manage volume is just not scalable! Currently additional volume means additional resource
The thing is, it doesn’t have to be this way. In the modern era, companies like Uber have shown how transport can be cost-effectively and efficiently provided by linking the user directly to the supplier. So surely there must be a way to provide this automated efficiency to the logistics industry, and let it confidently step into the 21st century?
Dr. Madhav Durbha recently wrote a great article on: How Uber Parallels the 6 Design Principles of Digital Supply Chain and says:
“When I call for a ride on Uber, it matches me to the nearest driver and sends him my way. It does this by knowing my geolocation and the kind of ride I need (e.g., UberX vs UberXL). In other words, it understands my context. Likewise, a digital supply chain should understand the context of the demand (where it needs to be filled, when, priority of the customer placing the demand, etc.) and match supply in the most profitable manner.” – Dr. Madhav Durbha
Here at TGMatrix, we have been working with large multi-national organisations to do just that.
- Deploy an advanced technology platform incorporating leading edge but proven and tested technology
- Build a community of shippers and carriers who collectively have the critical mass to optimise the use of resources and transport modes
- Match transport demand (freight) and supply (assets) in near real time via an algorithmic driven matching engine thereby reducing empty running and consequently reducing noxious emissions
- Provide 100% visibility and connectivity thereby enabling modal shift – road to rail or short sea and coastal shipping (SS&C)
- Provide a highly-automated transaction platform to break the current linkage between volume and human resource
- Bring the Intermodal transport industry firmly into the Internet age
“TGMatrix is one of the leading firms in European digital freight management market today with an industry-leading algorithm to objectively match shippers and carriers. By ensuring transparency, improving efficiency of decision-making and considering aspects such as total carbon footprint required for fulfilment, TGMatrix’s innovative platform could potentially be a trendsetter in the industry.” – Market Insight – Digitising Freight – one truck at a time
- 15% cost reduction for shippers
- 100% increase in margin for carriers (from 2.8% to 5.6%)
- TGMatrix will drive between 15%-30% reduction in empty kilometres across the €350Bn European Road freight market
- Average ROI of 250%
- Reduction of 1,800,000 tons p.a. of CO2e
- 15% reduction in congestion from reduced empty kilometres and modal shift
We would love to talk to you more about how this technology could work in your business. Send me a message or give me a call and I will be happy to guide you through the process.
Other Sources & Credits:
- Source – FTA 2015 Logistics Report
- Source – EU Commission Transport Pocketbook
- Source – Guidelines for Measuring and Managing CO2 Emission from Freight Transport operations
- Source – Cefic 2011 https://ec.europa.eu/jrc/sites/default/files/congestion_report_final.pdf
- Source – FTA 2015 Logistics Report
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