Revolutionizing the Trucking Industry: The Power of Automation and Dynamic Bidding

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If consumers are considered the heart of America’s economy, then the trucking industry can be seen as its lifeline. Accounting for approximately 72.5% of all overland freight movement in the United States, this industry employs nearly 6% of all full-time jobs in America and generates close to 800 billion dollars in annual revenue. However, the reliance on manual systems for finding, bidding, and paying for shipped loads has resulted in numerous inefficiencies, including outdated bid prices, misleading data, and a mismatch of routes leading to empty trailers. Traditionally, these tasks were performed using paper spreadsheets or online load boards, with bidding analysis becoming an arduous and time-consuming process akin to a second full-time job.

Transportation procurement holds a crucial role in the modern supply chain. The majority of truck-bound freight, usually exceeding 80%, moves under a contract between a shipper and an asset-based carrier, a shipper and a broker, or a mix of both, known as Third-Party Logistics (3PL). While automated bidding tools are essential for shipper-sourcing events, they offer benefits to all parties involved. Historically, larger motor carriers have dominated freight contracts, with smaller carriers picking up loads from other carriers, brokers, or load boards where brokerages post loads, often under contract with a shipper. This system often leaves smaller carriers more vulnerable to market forces and rate volatility, subjecting them to fluctuations in freight demand and capacity. The impact of the spring 2020 downturn and subsequent recovery in the latter half of the year demonstrated the feast and famine effect, with small carriers being hit the hardest initially but eventually benefiting from surging spot rates.

In the past, the transportation procurement system and contracts have been a continuous nightmare. Creating an intermodal bid package for carriers in a spreadsheet, for example, required meticulously entering the company’s lane volumes while ensuring the removal of any errors or misleading data. This information was then emailed to each carrier, necessitating time-consuming responses to detailed technical questions about the spreadsheet data. Finally, the results would be compiled, an algorithm would be created to compare carriers on each lane, and the business would be awarded to the best match.

Recent years have witnessed a surge in new technologies aimed at the trucking industry, which has long been associated with antiquated load boards and procurement systems. One of these technologies is automated bidding systems. Drawing on Request for Proposal (RFP) best practices and protocols, automated bidding systems streamline the bidding communication process, enabling carriers to respond accurately and promptly to shipper requests. The solution also automates the distribution of bid data, electronically submitting shipper bid information to carriers based on their actual service capabilities and performance records. Carriers receive timely prompts for RFP deliverables, eliminating the need for shippers to wait by the phone for responses.

Automating the bidding process also offers assistance with data cleansing. When spreadsheets are used to send data to carriers, errors may arise, which can cloud the bidding process. In such cases, carriers might need to resend data or accept prices that do not accurately reflect their costs. Before bidding automation, carriers had no way to accurately respond to bids when data was missing or incomplete, often having to plan for the worst-case scenario. Pricing teams in the trucking industry tend to be highly analytical and risk-averse, which is reflected in their price offers. By providing carriers with clean and complete shipment history, along with future volume forecasts from shippers, carriers can confidently make decisions and offer competitive prices, leading to savings for shippers. In fact, carriers used to complain about the data customers submitted before bid technology tools were available. When carriers receive more data from shippers, giving them a comprehensive understanding of a shipper’s freight, everyone benefits.

Automated bidding is not the only

tool advancing the industry. Several companies have recognized the technology gap left by incumbents and seized the opportunity to innovate. These companies, employing a significant number of data scientists, have moved away from handwritten communications stored in offline financial books to embrace more efficient systems such as dynamic pricing models and network layering.

One such company leading the charge is Loadsmart, a logistics technology firm at the forefront of the trucking industry’s transformation. Loadsmart utilizes its proprietary Transportation Management System (TMS) software to create a network effect throughout the country, tackling the driver shortage and reducing the number of empty trailers. Their suite of technologies includes an automated dynamic bidding model, which is just one aspect of their comprehensive approach. With 40% of CO2 pollution attributed to the trucking industry, Loadsmart’s focus on filling empty trailers aligns with its commitment to reducing carbon emissions. By simplifying the adoption process for trucking companies, Loadsmart enables filling those empty trailers, minimizing wasted miles.

Loadsmart’s TMS integration allows for continuous refinement of the procurement process. By leveraging TMS capabilities and establishing seamless communication with their servers, Loadsmart provides immediate and programmatic pricing within seconds. This integration has drastically reduced the time required for certain tasks, with one case study demonstrating a process that previously took five hours being completed in just 18 minutes. Loadsmart’s relentless pursuit of efficiency extends to increased trailer utilization, addressing environmental concerns. Through iterative improvements, Loadsmart aims to enhance its operational effectiveness further. Additionally, the company emphasizes the importance of cultivating partnerships with tech-forward organizations that are willing to share data, as this collaborative approach propels both Loadsmart and the industry forward.

Another compelling aspect is Loadsmart’s network layering effect, which grants them unparalleled visibility into the majority of logistical movements within the trucking industry. With the potential for more companies to opt in, Loadsmart’s network layering provides significant benefits, enabling them to achieve more with less. This advantage allows for the optimization of routes, the rebalancing of underlying networks, and the creation of triangulated lanes. Currently, motor carriers have limited visibility on their total class A trucks, typically no more than 1%. However, through rebalancing efforts, the industry becomes more efficient for all stakeholders. The network effect empowers Loadsmart to provide shippers with comprehensive capacity and instant pricing capabilities.

By leveraging their TMS and integrating it seamlessly into their operations, Loadsmart offers shippers and carriers a transformative experience. Their efficient, data-driven approach enables customers to book shipments and access pricing instantly. Whether it’s a shipment from New York to Atlanta or a return trip from Atlanta to New York, Loadsmart facilitates seamless matching, significantly reducing the occurrence of empty trailers and wasted miles.

As Loadsmart continues to refine its innovative solutions, they remain passionate about its mission to automate the full truckload shipment cycle. With their commitment to leveraging data aggregation, Loadsmart empowers shippers and carriers to navigate the complexities of the trucking industry efficiently. By combining advanced technologies, network layering, and dynamic pricing models, Loadsmart is leading the way toward a more streamlined, sustainable, and data-driven future for the trucking industry.

In conclusion, the trucking industry is undergoing a significant transformation driven by advancements in technology and the adoption of innovative solutions. Automated bidding systems, pioneered by companies like Loadsmart, are revolutionizing the procurement process, enabling accurate and prompt responses to shipper requests while eliminating inefficiencies caused by manual systems.

Loadsmart’s comprehensive approach, including its proprietary TMS software and dynamic bidding model, has enabled them to streamline operations, reduce waste, and optimize routes. By filling empty trailers and minimizing wasted miles, Loadsmart not only benefits shippers and carriers with efficient pricing but also contributes to reducing CO2 emissions, and addressing environmental concerns.

Furthermore, Loadsmart’s commitment to data-driven decision-making and its network layering effect positions them as a frontrunner in the industry. Their ability to aggregate and analyze data provides invaluable insights and empowers shippers and carriers with accurate information to make informed strategic decisions. Through partnerships and collaboration with tech-forward organizations, Loadsmart aims to drive the industry forward and unlock new possibilities.

As the trucking industry continues to embrace automation, dynamic pricing, and network optimization, Loadsmart stands as a trailblazer, leading the charge toward a more efficient, sustainable, and digitally-driven future. With their unwavering dedication to innovation and commitment to meeting the evolving needs of the industry, Loadsmart is shaping the way freight is moved, improving operational efficiency, and driving positive change throughout the supply chain.

Cites:

Industry knowledge:

https://www.statista.com/topics/4912/trucking-industry-in-the-us/