The tables have drastically turned since last spring when the economic shutdowns led to a drop in demand, causing truckload rates to plummet to under $1 dollar per mile. For the past year, transportation costs for shippers have spiked, as spot market rates are well above $3 per mile, causing contract rates to rise as well.
As long as the current high-demand environment persists, spot rates will stay elevated. While orders for new trucks and the end of social distancing promise an influx of new capacity, it’s unclear just how much and exactly when this will occur.
In an exclusive interview with FreightWaves, Transplace CEO Frank McGuigan introduced Transplace’s latest Logistics Solutions Platform offering, Intelligent Spot, which leverages leading-edge technology, a team of domain experts and its vast unbiased carrier network to deliver transparent and true spot market execution. Shippers that already use Transplace’s transportation management system (TMS), as well as those that aren’t ready to depart from their legacy TMS, have access to real-time, API-powered true market spot rates and fully transparent shipment execution.
McGuigan said that because transportation markets are increasingly volatile, the industry needs to focus on providing shippers with solutions that deliver accountability and transparency while addressing challenging carrier relationships after countless tender rejections — or what McGuigan calls “freight abandonment.”
“What differentiates Transplace in the market is that we view a shipper’s network holistically. Over time we understand its performance tendencies and then successfully engineer technology and procurement strategies that limit risk and maximize performance. In essence, we lift the shipper’s network onto our platform, allowing our technology and domain experts to engineer and execute the best possible outcome.”
Shippers need immediate support, along with information and solutions
For many shippers, the process to find spot capacity is problematic. They either have difficulty finding the capacity or the capacity alternatives they have found are significantly above market cost. Without technology and data, the process is manual and shippers lack visibility to current rates on a real-time basis. Additionally, the pool of carriers available to most shippers is limited, with digital and traditional brokers filling that gap with speed but not necessarily competitive prices. Digital load boards and freight-matching systems are additional options, but these tools are not always real time and can lack scale and service accountability.
Some TMSes also provide auction modules that reduce manual touches by utilizing a shipper’s approved broker and carrier network for pricing and capacity. “While we like the automation impact, the auction field can be limited and may not drive the desired price competitiveness,” said McGuigan. “Our flexible approach allows us to send a spot load through Transplace Network Services, leveraging our $11 billion network to find the optimal solution for that load, which may or may not be in the spot market.”
Transplace Intelligent Spot provides a shipper with a turnkey solution for uncovered shipments utilizing Transplace’s technology platform. Intelligent Spot sources available capacity through API-powered connections to Transplace’s network of carriers, including dedicated and private fleets, for rapid capacity procurement while simultaneously evaluating alternative capacity options, including continuous move opportunities, consolidation and pooling.
The technology adds order to the auction frenzy by looking at collaborative services and strategic carriers within Transplace’s network — all while providing speed and reduced market exposure for the customer. Once a solution is found, Transplace owns the outcome and is accountable for service and cost management.
When a shipper deploys the Logistics Solutions Platform, Transplace can pinpoint where a shipper’s truckload network is underperforming. For example, a shipper can see that its mean cost per lane last year was $1,000 and was 94% on time. Now that same lane is running at $1,110 — an 11% unexpected increase — and is only 88% on time, revealing a critical loss in revenue. Transplace experts can help shippers with market analysis, procurement actions and strategic collaboration opportunities utilizing technology like Transplace Lanehub to mitigate problem lanes. In January 2020, Transplace added Lanehub to its logistics platform, allowing shippers to find complementary freight lanes with other network partners, saving shipping expenses.
Transplace’s goal is to advance its Logistics Solutions Platform through both innovation and acquisition, enabling the Transplace team to deliver alternative capacity solutions to shippers in an efficient and cost-effective way. Ultimately, all stakeholders win with a reduction of empty miles for the carriers, increased competitiveness for shippers and carbon reduction throughout the network.
“We’re committed to providing our shippers with actionable data insights to drive supply chain agility, transparency and predictability. The future success of digital platforms is predicated on how we scale and deliver them to bring real-time value to shippers, regardless of market conditions,” said McGuigan.