With iLENS, McLeod Software dives into freight management
Freight management and fleet management technology may seem to be polar opposites. On one side, shippers are looking to reduce freight costs with bid packages and transportation management systems (TMS). On the other side, carriers and third-party logistics providers (3PLs) are using software to control assets and protect their profit margins.
During the dot-com boom in the late 1990s, some technology ventures tried to bridge the gap with “transportation exchanges.” The idea was to reduce shippers’ costs and increase carriers’ visibility to freight by creating online spot markets. Carriers could compete for freight in a reverse auction process.
Michael Voelk saw the inherent flaws of transportation exchange while working for Bid Freight Global, an IBM-backed company that he says ignored the importance of shipper-carrier relationships in the bid process. “That was the ludicrous nature of what was going on (at the time),” Voelk says. “The thinking was really way out there.” Voelk says a bid process that beats carriers up over price forces them to start playing games, such as asking for rate increases and rejecting loads once the bid process is complete.
After the dot-com bubble burst in 2001, Voelk sought to return shipper-carrier relationships to the bid procurement process. He became a consultant for several large shippers’ bid procurement projects and used the income to create iLENS (Integrated Logistics Execution Network Systems), a new type of freight management software. The company developed an efficient Web-based system used by shippers and freight management service providers to create money-saving rate guides without beating carriers up over pricing, he says.
To do this, iLENS uses a bid procurement process called Carrier Alignment in which carriers submit bids one time; the shipper does not see the bids until the bid closes. The iLENS system optimizes the rate guide and awards freight to carriers based on volume commitments by lane.
Early users of iLENS for bid procurement included Pilgrim’s Pride and Smithfield Foods. Freight and data management companies – often called fourth-party logistics providers (4PLs) – also use the software; Dallas-based Greatwide Logistics was one of the first 4PL customers. Voelk says that in addition to bid procurement, iLENS also offers load tendering, load execution and other features common to transportation management software (TMS).
In April, Voelk became vice president of iLENS sales for McLeod Software when the Birmingham, Ala.-based provider of transportation, brokerage and document management systems – whose primary customer base is asset-based truckload carriers – acquired iLENS. The divide between freight management and fleet management technology seems to be closing.
“(iLENS) developed a process that is much more respectful and fair to the carrier,” says Tom McLeod, president and chief executive officer. McLeod says the acquisition shouldn’t be a surprise; rather, it was a logical step. About four years ago, McLeod Software released PowerBroker, an enterprise management system for brokerage and logistics companies, as more asset-based carriers were moving in that direction. “It almost seamlessly extends what we are doing,” McLeod says. “Every company has some level of freight brokerage.”
Increasingly, carriers and providers of brokerage and logistics want to add freight management services for their shipper customers. Also, users of both LoadMaster and PowerBroker will benefit from integrating iLENS into their load tendering, billing and payment functions, McLeod says.
McLeod Software also plans to market iLENS directly to shippers, although it risks competing with its own customers to a degree. For example, a PowerBroker user might use iLENS to market its freight management services to shippers. But McLeod says the market is big enough so that instances of cross-selling to the same shipper will be rare. If it does happen, McLeod-iLENS will treat all of its clients and prospective shipper clients respectfully on a first-come first-serve basis, he says.