Real-time Capacity Matching: Making Brokers More Efficient

The real-time freight visibility space was particularly hot in 2017, with two major acquisitions announced last year, including Descartes’s acquisition of MacroPoint in August 2017. Demand for these solutions, from both shippers and brokers, continues to grow because companies want to identify and implement better ways to plan and execute their transportation and logistics operations, which is what ultimately delivers value.

As I’ve highlighted before, there are several ways that real-time freight visibility delivers value:

  • Visibility enables proactive action: to reschedule, resequence, or reroute pickups or deliveries, and to proactively notify customers of delays and updated Estimated Times of Arrival (ETAs), which gives them time to readjust plans and reallocate resources.
  • Visibility Enables “Manage by Exception”: enables companies to focus time and resources on what’s not occurring to plan to proactively resolve or minimize its impact.
  • Visibility Enables Faster Procure-to-Pay and Order-to-Cash processes: for example, you can leverage Electronic Proof of Delivery (ePOD) and geofencing to initiate invoicing and payment process.  

At the Descartes Evolution User Conference this past March, I attended several sessions about the MacroPoint solution and they were all standing room only, including the one where William Wehrle and David Bazzetta from BASF shared their case study.

In case you missed it, check out my short video interview with William and David and our write-up of the case study.

Real-time Capacity Matching: The Second Wave of Demand and Value

Another session that generated a lot of interest was the one led by Dan Cicerchi, VP at Descartes MacroPoint (a Talking Logistics sponsor), on Real-time Capacity Matching.

The ability to answer “Where’s my truck or order and when will it arrive?” is what drove the first wave of demand for real-time freight visibility solutions. The second wave of demand, which is starting to gain momentum now, is being driven by a different question: Where and when will capacity be available a few days from now?

For brokers in particular, who are facing margin compression and increased competition from digital freight startups, the ability to have forward visibility to capacity and book loads faster and more efficiently will be critical for success moving forward.

“The further out you book freight, the less expensive it is,” explained Cicerchi in a video interview I conducted with him at the user conference. “Not only are you reducing the cost of purchasing transportation, you’re also [making fewer phone calls and using less labor] to find the truck you need.”

During the conference session, Cicerchi highlighted several capabilities that today’s transportation service providers need to stay competitive:

  • Find available capacity both inside and outside their carrier network
  • Understand the location the carrier wants a truck to go next
  • Know which carrier is the right carrier to call first
  • Book a carrier faster and with fewer phone calls

To make real-time capacity matching work, you need a critical mass of data, carriers, and logistics service providers. At the time of our interview, Descartes MacroPoint had over 115,000 carriers and over 2.3 million in-cab devices connected to its network, and 80 of the Top 100 brokers in North America were using its solution.

From a technology standpoint, you also need predictive analytics capabilities to intelligently match forward-looking capacity with available loads, and a framework that respects the confidentiality and data-sharing requirements of the network participants.

Back in March, Descartes was pilot testing the solution with a small number of clients, but the early results were encouraging. “In our tests, we’re reducing the number of phone calls made to broker a truck by 50-60 percent,” Cicerchi said. “Think about the amount of headcount required to make those calls. Brokers can either reduce that headcount or redeploy them to grow their business without adding more people.”

Simply put, while digital freight companies are attracting a lot of money and attention in their quest to disintermediate the brokerage business, there’s another big opportunity that Descartes is going after instead: making the current industry stakeholders more efficient.

“It’s about helping brokers reduce the time and costs associated with finding capacity, and at the same time, helping carriers reduce deadhead miles by giving them better options to move their trucks without a lot of empty miles,” said Cicerchi. Margin compression is not going away, so you have to counteract it by becoming more efficient.

Watch my full interview with Dan for additional insights on this topic. Then post a question or comment and keep the conversation going!