Choosing vendors, following industry requirements, planning routes, and tracking cargo—freight management comprises the core of international logistics and supply chain operations. In a similar vein, for the past decade, building a freight management system has become an emerging objective for manufacturers, carriers, and 3PL providers.
Growing at a CAGR of 9.7%, the global freight transportation management market on one hand holds untapped opportunities while on the other requires supply chain professionals to actively enhance process efficiency through dedicated freight management system software.
How to make the most of freight management digitization? What are the essential components of a modern freight transportation and management solution? Why should you invest in building one from scratch and, finally, how to get started?
Get all the questions answered by our practitioners in this comprehensive step-by-step guide.
Understanding freight management
In essence, freight management is the process of ensuring goods move smoothly from one place to another. Typically, this involves planning, controlling the freights being shipped, and accounting for any potential disruptions along the way, which boils down to solving tasks like carrier selection, route optimization, shipment monitoring, and document management.
As freight management encompasses several aspects of transportation and logistics at once, it involves multiple parties collaborating with each other at different stages until goods reach their destination and is characterized by a number of process-specific challenges. Let’s look at them in detail.
Parties involved in freight management
- Shippers
The shipper is the entity or individual responsible for initiating the transportation of goods. This can be a manufacturer, distributor, or any party sending goods from one location to another and determining the nature and timing of shipments.
- Brokers
Acting as an intermediary, a freight broker facilitates transactions between shippers and carriers. Brokers are the ones negotiating shipping rates, connecting shippers with suitable carriers, and managing the logistical details of the transportation process.
- Carriers
This category includes trucking companies, airlines, shipping lines, and other transportation service providers responsible for physically transporting the goods from the point of origin to the destination. Carriers ensure that the goods reach their intended location safely and within the agreed timeframe.
- Customers
The customer, often the recipient of the goods, can be a shipper or an individual consumer awaiting the delivery of products. Their satisfaction is a key metric in evaluating the effectiveness of the freight management process.
Freight management challenges
In reality, one of the key challenges in freight management is the necessity to enable smooth collaboration between the parties mentioned above. Additionally, the complex nature of the logistics process itself creates a few more including:
- Dynamic supply chain environment including constantly changing weather conditions, traffic, and global events that impact transportation routes and schedules.
- Regulatory compliance involving adherence to a myriad of regulations and requirements, which can be time-consuming and error-prone when handled manually.
- Diverse stakeholders that include shippers, carriers, brokers, and customers, each with different priorities and requirements.
- Communication gaps that appear due to inefficient communication channels and often lead to misunderstandings, delays, and missed opportunities for collaboration.
- Operational inefficiencies and namely poor route planning, non-optimal resource utilization, and manual handling of processes contributing to increased costs and delays.
- Information overload caused by the need to manage vast amounts of data related to shipments, routes, and compliance.
- Risk factors including unforeseen disruptions, whether natural disasters, accidents, or geopolitical events, pose significant risks to the smooth flow of goods.
- Limited visibility into the status and location of shipments make it challenging to respond promptly to issues.
Why build a freight management system?
In addition to the general challenges and process peculiarities we mentioned above, freight management has become even more intricate in recent years.
- Demand fluctuations caused by COVID-19 and the subsequent global economic crisis caught unprepared carriers off guard, leading to massive supply chain shocks and exponentially rising costs.
- According to Statista, 56% of global retailers experienced supply chain disruptions during the pandemic.
- In fact, every third freight carrier in the US is inching closer to financial collapse.
By building a freight management system, the parties involved in transportation can not only address arising supply chain challenges but get a number of game-changing advantages.
Benefits of building freight management system software
- Cost savings
Freight management software helps shippers choose the best delivery options from a speed and cost perspective, ultimately reducing shipping expenses.
- Efficiency boost
Freight management automation streamlines the shipping lifecycle, minimizing manual work and eliminating human errors, leading to improved shipping efficiency.
- Enhanced inventory and shipping control
A freight management system helps to optimize inventory levels by providing real-time shipping tracking and contributing to increased visibility across the supply chain.
- Improved customer service
Freight management solutions enable faster and more personalized customer service by ensuring smoother operations and providing customers with a real-time view of their orders through a dedicated logistics portal.
- Streamlined decision-making
Systems for efficient freight management suggest optimal cargo movement methods, facilitating quicker and more efficient business decisions for improved operational efficiency.
- Customization and scalability
Tailored to meet specific business requirements, freight management system software can easily scale as the business grows, adapts to the changing market requirements, or undergoes operational changes.
Now that we got acquainted with the reasons to use a freight management system, let’s proceed to uncover its key elements and the steps to make them work together and improve business outcomes in practice.
Key modules of a freight management system
If we get back to understanding the interactions between the parties involved in freight management, it becomes clear that making dedicated software efficient is only possible if every role is provided with the needed functionality. Because of that, most freight management systems encompass enterprise resource planning (ERP), transportation and warehousing management (TMS and WMS) and often include features for routing optimization, freight forwarding and rate management.
At Trinetix, we work with transportation companies, brokerage firms, and 3PL providers to help them make the most of freight logistics with tailored software solutions. Our practice shows that efficient freight management comprises 6 essential elements providing value to each role involved in the process. These include shipment management, transportation planning optimization, shipment visibility, document management, data management, and audits.
SHIPMENT MANAGEMENT
Shippers: initiate and oversee the movement of goods.
Brokers: coordinate shipments and provide logistics services.
Carriers: plan and execute the transportation process.
TRANSPORTATION PLANNING OPTIMIZATION
Shippers and brokers: optimize route planning, choose the most suitable transportation modes, and negotiate favorable rates.
SHIPMENT VISIBILITY
Carriers and shippers: monitor the location and progress of cargo to promptly address any issues.
Customers: get accurate updates on the status of their shipments.
DOCUMENT MANAGEMENT
Brokers, shippers, and carriers: streamline the preparation, storage, and retrieval of necessary paperwork, ensuring compliance, reducing errors, and expediting customs clearance.
DATA MANAGEMENT
Shippers, brokers, and carriers: secure storage, processing, and analysis of vast amounts of data related to shipments, routes, costs, and compliance.
FREIGHT AUDITS
Shippers and brokers: verify the accuracy of freight charges, ensure billing compliance, validate costs, and reconcile invoices.
If you aim to develop logistics software that’s efficient in practice, you need to always make business processes paramount. Because in reality, for every company there is something that goes beyond any best practices and industry guidelines. Detecting and addressing this specific element is the backbone of successful freight operations and transportation management.
for a US-based brokerage firm
Building a global freight management system in 6 steps
Approaching the development of freight management software, the majority of global companies, first of all, aim to improve the overall efficiency of their logistics operations. This however still involves building an end-to-end implementation strategy.
Below we outline the six key steps to create a global freight management system that meets growing market needs and improves business outcomes.
Step 1. Assessing the current state
To make the most of freight management system software development, logistics providers need to start by understanding their existing freight transportation processes. This includes auditing any freight brokerage software used within the organization and identifying the pros and cons they bring to the company’s operations. Once comparing the costs versus benefits companies can either consider refactoring the existing freight management solution or developing a new one tailored to the evolving needs and objectives.
Step 2. Setting goals and objectives
The understanding of efficient freight management is different for different companies. While for some it includes streamlining the cargo journey and automating deliveries, for others the key to success is improving last-mile delivery and enhancing customer service. That’s why embarking on freight management optimization, it’s crucial to articulate clear goals that align with specific business needs.
Step 3. Evaluating existing freight management software
Today’s freight transportation software market offers a variety of systems provided by world-known tech brands and dedicated software providers. Most of them can satisfy general freight management needs like transportation administration, route planning, and shipment monitoring and offer integrations with popular supply chain management software. At the same time, they lack customization, which in today’s competitive market often results in missed business opportunities.
Outpace competitors and drive increased process efficiency
with tailored freight management solutions
Step 4. Implementing a dedicated solution
Once recognizing that the limitations of the freight management software available in the market hinder operational efficiency and put business outcomes at risk, supply chain professionals often consider partnering up with a dedicated digital partner for the implementation of a tailored solution.
As a rule, the implementation starts with the development of an MVP solution. This allows for minimizing risks and maximizing the potential for a high product-market fit. If this solution proves to successfully fulfill the promises set at the beginning, it usually grows into a global product and is further customized to meet the specific business requirements of the logistics services provider.
Step 5. Establishing team training
The success of the whole freight management optimization project depends on the way the newly implemented solution is adopted in practice. That’s why the provider of logistics development services is also responsible for providing comprehensive product training and testing the system in action – when used by freight management practitioners.
Step 6. Measuring success and suggesting improvements
As a rule, with time, business requirements evolve and the freight transportation market faces new challenges and opportunities. In this context, supply chain professionals should understand that no freight management system was built once and forever. That’s why it’s essential to timely measure the success freight managers are having with dedicated software and suggest future improvements based on their feedback.
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The dynamic freight management system industry requires each entity involved in transportation to remain accountable for process efficiency and preserve a top-tier customer experience while shipping and delivering goods.
At Trinetix, we develop hands-on digital assets that help logistics leaders future-proof operations and deliver freight management experiences that go beyond industry standards. If you’ve got a project in mind – let’s chat about making the most of its implementation.
