A few years ago, taking customers to lunch or repeated phone calls might have resulted in increased freight volumes. The formula for success has changed as many shippers and third-party logistics firms turned to advanced software systems to optimize their network in terms of pricing and coverage. Decisions as to which carrier gets what freight have become largely automated.
Relationships still matter, of course, but they are now measured along with a host of other key indicators. Transplace, a major 3PL and technology provider that spends $2.5 billion each year on freight, symbolizes this movement toward unbiased carrier selection.
Transplace built a carrier management group that consists of nine members. The job responsibility of each member is strategic – not transactional – by nature. Collectively, the group’s role is to find and reward the capacity in Transplace’s system that meets its high standards.
“The carrier side is of equal importance to the customer side,” says Roy Cashman, chief operating officer of Transplace.
The carrier management group scores, ranks and certifies carriers into one of three tiers: platinum, silver and bronze. The ranking is based on performance in areas that include automation, on time service, and customer service. Incidentally, customer service is one of the few slightly subjective measurements where the personal relationships can make a difference, Cashman says.
Once carriers are certified into one of three levels, they are prioritized and assigned to individual account teams. The teams work with carriers one on one to identify new freight opportunities in Transplace’s freight network. One type of opportunity is to create routine dispatches for continuous moves or roundtrips. This opportunity represents a small percent of its business, but has proven to be effective, especially with smaller carriers and private fleets.
“(Continuous moves) is a high service product,” Cashman says. Fleets learn in-depth experience about the customers, relationships, handling, and appointment times, Cashman says.
Another opportunity for high-ranked carriers is accelerated freight payment, he adds.
As new business opportunities are identified and carriers agree, Transplace sets up lanes in its carrier routing guide. The rest is automated through electronic transactions – load tenders, status updates, invoices, etc. – that move between carriers and Transplace’s information systems.
For carriers that don’t have electronic data interchange (EDI), Transplace offers a carrier web suite that allows carriers to see and accept tendered loads, and to make appointments for delivery times.
“As long as it is an electronic touch on our end, we’re satisfied,” Cashman says.
If the primary carrier for a lane chooses to reject a load, Transplace has a Freight Allocation Module (FAM) to tender the load to a secondary carrier. If the load is still available, the FAM puts the load out to a public auction to carriers that have priority status. In other words, if you haven’t established a superior record of performance, don’t expect a phone call to make a difference. The computer has already made its decision.