Moving your product from point A to B may sound like a simple step in the supply chain but is often one of the largest cost centers for businesses that ship freight. Traditional shipping methods rely on highly manual processes and fragmented supply (trucks and drivers), resulting in frustration, higher than expected expenses, and longer lead times. Digital freight networks (DFNs) have emerged in the last five years as a solution to many of the challenges of traditional shipping. These open, full connected freight marketplaces use machine learning, automation, and other software services to efficiently connect shippers and carriers.
To start, let’s dive into the main ways that businesses move their goods throughout the U.S.
Product is moved by itself in a truck with a 48’ or 53’ trailer. This mode of transportation is often used for larger shipments that will take up more than half of a trailer. Businesses will also use this method if they want their shipment in a trailer by itself, or if the freight is time-sensitive as FTL shipments are picked up and delivered directly as instructed by the shipper.
Product is moved with a variety of freight from other shippers to fill a 48’ or 53’ trailer. LTL freight shipping is used when a shipper does not have enough product to fill a trailer as it can be more cost effective. Keep in mind that LTL shipping takes much longer as your product will stop multiple times and be moved between trailers for different legs of it’s journey.
Product is moved via two modes of freight, typically rail and truck. The product is packed into a container, moved by truck to rail, then picked up by a truck for the final leg to delivery. Shippers often choose this method for freight that is moving long distances.
The majority of shipment volume is moved via contract rates which are established during annual RFPs (Requests for Proposal). The carriers that submit the strongest proposal are awarded the freight and known as the “primary” carrier on the lane which means that they need to honor that rate up to a certain volume threshold.
The goal of RFPs is to find the best carriers at the best value to create a reliable and predictable budget. However, the freight market can shift significantly over the course of a year-long contract and unexpected macroeconomic events can cause carriers to back out of previously-agreed contracts.
Backup rates are rates that shippers can use in the event that their primary carrier rejects or fails on a load. Carriers that give you backup rates have no volume commitment and have the option to either accept or reject the shipment depending on their supply of drivers and current market conditions.
Spot rates, unlike fixed contract rates, adjust dynamically based on the freight market. Spot rates are typically only good for a single shipment during a small window of time. Shippers typically use spot rates as a last resort as the rates are highly variable and the process of tracking down one-off rates can take a lot of time and effort.
DFNs streamline full and less-than truckload shipping for businesses across every rate type. Because technology is at the core of the matching process, DFNs are much more efficient than traditional brokers and carriers at finding coverage for your shipments. Here’s why.
Digital freight networks automate the matching of trucks to shipments, which drastically reduces the time it takes to find the most cost and time-efficient truck for every load.
A digital freight network uses automated tracking and technology to ensure that loads are offered to every single available driver simultaneously, so the best driver is selected to run your freight.
As digital freight networks grow, they become more efficient. When new shippers join the network, drivers have more options to get the lanes they want to run and the freight they want to carry, which translates to higher service levels. With more capacity, trucks are more efficiently matched, keeping them full and earning. Because carriers can earn more in a given timeframe, the rate they are willing to accept for each individual load is often a little lower, which in turn lowers the price for shippers.
Based in Seattle, Convoy built the nation’s first and most efficient digital freight network and is working with businesses of all sizes to reduce costs, save time, and streamline freight operations. Convoy moves millions of full truckloads of freight each year for businesses across the U.S.
You can quickly tap into Convoy’s digital freight network by signing up for the Convoy shipper platform which gives shippers the power to quote, book and track shipments on-demand.
Convoy is currently offering up to $3,000 off of truckload shipping for new customers. Sign up now to start streamlining your shipping with the Convoy shipper platform and book your first shipment today, or get a free quote.