2020 – The Freight Transportation Year in Review – Part 2

Covid-19, and its effects on our personal and business lives, was clearly the major story of 2020. This topic was covered in the previous blog.  The impacts of the other major news story, the Biden / Harris election, will play out over the next four years. However, there were several other surface transportation events over the past 12 months that were significant. They are summarized below.

1. Digitization advances in the world of Freight Transportation

Digitization, the replacement of manual, paper-based information processes with electronic ones is transforming the industry. The benefits are clear. Shippers obtain precise data on cargo, from pickup to delivery, on which to base decisions. Carriers have more data on how and where they serve specific shippers and on their true costs. The wave of digital technologies already transforming truckload and brokerage is reaching into LTL, driven in part by larger supply chain changes and by the explosion of e-commerce.

Technology is not the problem; some trucking companies have been electronically sharing data with customers since the 1980s, first via electronic data interchange (EDI) and more recently via application program interfaces (APIs). The roadblock is in the process, in implementing digital standards, and in getting customers to buy into going digital.

Covid-19 has sped up the process. Many shippers are looking for digital, electronic, contactless pickup and deliver. Since there is a range of different ways of doing things, an LTL Digital Council has been established so a set of consistent standards can be developed.

2. The Rise of Digital Freight Networks and Digital Freight Marketplaces

Digital freight networks (DFNs) are freight marketplaces that use machine learning and automation to efficiently connect shippers and carriers. These networks consolidate tens of thousands of carriers from across North America and provide access to this capacity through easy-to-use online tools.

For example, Convoy’s shipper platform enables small and midsize businesses to access a nationwide network of hundreds of thousands of dry vans and reefers through any web browser. Transportation teams can use this tool to get instant online quotes for spot shipments, quickly set up contract rates, and take advantage of new pricing models to reduce their transportation costs.

Freightera can also move intermodal, heavy haul and “green freight.” Schneider plans to make a further investment in its new digital freight app, FreightPower. The load-booking technology increases visibility, providing increased access to capacity for shippers and improving load options for carriers. Real-time rates and automatic tracking updates through geofencing technology allow both parties to better manage loads and equipment.

DFNs move millions of truckloads each year for shippers across the country. Shippers in every industry are allocating more and more volume to these networks based on their ability to improve operational efficiency.

3. Market Forces are Leading to a Reshoring Movement / North America’s New Relationship with China

Imports and exports to the Chinese market slumped following a trend beginning with the passage of the Section 301 tariff regulations (administered by the International Trade Administration, U.S. Department of Commerce) and the 25% tax levied in 2018. There has been an exodus of operations to Vietnam and Southeast Asia where the 301 tariff tax does not apply. Section 301 taxes cover over 6,000 products.

We are also seeing some re-shoring of critical manufacturing and non-critical manufacturing as these long global supply chains are difficult to manage, particularly in a pandemic, or when there are conflicts with certain trading partners. There are also difficulties with some key elements of the supply chain. It has been difficult to procure space on a ship resulting in some over?ow moving via air. As for imports, ports are congested, with ever-larger ships. The railroads are putting surcharges in place for small- and medium-sized customers. There are not enough boxes (containers) in the right places, and chassis are in the wrong places at the wrong time. There is a shortage of draymen to dray all these boxes so it is proving to be a very intense and long peak season that could continue beyond the holidays.

4. Predictive Analytics Comes of Age

In the trucking market, knowing what rates are available today is no longer enough. Shippers increasingly want to know what a shipment will cost next week, next month, or even 12 months from now, and predictive analytics technology is helping them obtain a clearer view of the future. In early January, DAT Solutions and Knight-Swift Transportation Holdings announced a pilot test of a rate forecasting tool that draws on historical pricing data from its DAT RateView database. The tool, DAT says, provides forecasts for multiple types of users, including shippers.

DAT Solutions is using predictive analytics technology to sift through more than $68 billion in annual spot and contract transactions to give cargo owners a better sense of what they could be paying for trucking over the next 12 months, as supply chain visibility focuses on the future. Predictive analytics — and rate forecasts, in particular — could have a significant effect on how shippers procure transportation services and contract truckers.

On June 1, DAT Solutions took another step forward as it reached a deal to acquire the Freight Market Intelligence Consortium, a subscription-based benchmarking and analysis service. DAT gained the service through a deal with supply chain consulting service Chainalytics.

The acquisition extended its market and pricing intelligence to include $118 billion worth of global shipment data across multiple transportation modes, including truckload, less-than-truckload, and ocean freight. FMIC represented almost $50 billion in actual freight transactions from roughly 200 companies across manufacturing, retail, wholesale, and third-party logistics. The plan was to integrate FMIC into DAT but operate much as it did before. The objective was to have FMIC accelerate DAT’s existing plans in data and analytics and provide a new capability around modeling and the understanding of what is going on in shipper markets.

Rival load board operator Truckstop.com, in partnership with FTR, offers a lane-by-lane rate forecasting tool. Coyote Logistics provides a more generalized market forecast through its Coyote Curve.

5. The Integration of Freight Platforms with TMS

Ongoing changes in shipping patterns caused by the COVID-19 pandemic are spurring the expansion of digital freight platforms that can provide shippers with access to carriers and rate quotes in close to real time. C.H. Robinson Worldwide took a major step in that direction in August by integrating 19 transportation management systems (TMS) and enterprise resource planning (ERP) systems into Navisphere, its global, multimodal transportation platform.

As COVID-19 changed shipping patterns, many lanes were not the same lanes anymore. The normal pattern was disrupted in real terms, in the number of loads, pallets, shipments, and the destinations themselves. That is where C.H. Robinson’s integration with TMS providers including Banyan Technology, Blue Yonder, FreightView, Kuebix, and Oracle Transportation Management, among others, became important.

The connections and automation made possible by the integration can save shippers an hour of time per transaction, with nearly instant market rate quotes. Shippers do not want to wait to hear back from a secondary or tertiary carrier. As companies go digital, the more customers they have. and the more carriers they have, the more data they can harvest and turn into value.

Similarly, Uber Freight Link, allows large-volume shippers to use their Enterprise product to manage and execute loads outside the Uber Freight capacity network. This represents a true move into SaaS in that it allows shippers to essentially use Uber Freight’s software as their platform to manage all truckload freight. Uber Freight said Link enables large shippers to more broadly use its “one-tap” tendering, visibility, exception management, and digital documentation technology across their full carrier networks, instead of relying on one-to-one electronic data interchange (EDI) connections with carrier transportation management systems (TMSs). Uber and other emergent, digitally native brokers have been busy the past year developing integrations with existing TMS providers. The broker Convoy, for example, announced in August a slew of TMS integrations with established providers such as Blue Yonder, Shipwell, and SwanLeap.

6. Power-Only Moves Gain in Popularity

In the third quarter of 2020, thirty percent of Knight-Swift Logistics’ truckload moves were power only; that means that brokers hired a tractor without a trailer of its own to move one of Knight-Swift’s trailers. Even more impressive is that the number of power-only moves nearly doubled in a year, growing by 87% compared to the third quarter of 2019. In brief, power-only and drop-trailer solutions offer shippers efficiency and flexibility while helping carriers be more productive. In a power-only move, a truck driver arrives at a shipper’s facility, finds a preloaded trailer, picks it up and drives away without waiting for a dock appointment or sitting through a time-consuming live loading. In a typical live load, shippers have to wait for three events to occur before loading a trailer: The freight has to be ready at the shipper location, the labor has to be available to load the freight into a trailer and the truck has to be at the dock. By preloading the trailer, a shipper can handle freight on its own schedule and avoid the congestion and delays that can come with waiting for a truck — and even use trailers in its yard as temporary storage capacity, increasing its facility’s throughput.

This year has been a wild ride in the surface transportation industry. In addition to the pandemic, several other powerful forces are shaping the future of truck and rail transportation.

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