Is Automated Carrier Connectivity Important for a Shipper TMS?

Carrier connectivity in transportation management is the ability to automatically send and receive electronic messages with a carrier, broker, or forwarder that a shipper is working with to move their freight. These messages include bookings or tenders, status/ estimated time of arrival (ETA) updates and invoices. For some transport modes this can involve additional message types, such as shipping instructions, container verified gross mass, or bill of lading messages.

Why Carrier Connectivity in TMS is Essential for Shippers

Many shippers, especially those with more than a few thousand shipments per year, consider a shipper TMS without carrier connectivity is like having a car without fuel or electricity. Even given this sentiment, and with the advances in technology, there are still many shippers who have operational teams that are sending emails, filling in booking websites and making phone calls with their logistics service providers (LSPs) on a daily basis. While these can be short emails or phone calls per shipment, when considered together they add up quickly to eat up the bandwidth of operational teams. In one example, a shipper measured the cost of manual communication processes for 50k shipments per year required roughly $1.5M in labor costs for a team to perform tasks which can be replaced by automatic carrier connectivity.

Of course, it all depends on how you have organized your process. For example, some shippers have automated the first step; sending a booking/tender email from their TMS, however in many cases that still triggers some downstream manual activity on the shipper side and certainly a lot of manual effort for the LSPs. Those manual activities LSPs must perform are not always visible to the shipper, and the LSP will try to recover those costs. This means additional charges (or higher base rates) will be invoiced to the shipper, on top of the shipper’s internal costs to support manual processes.

The Key Benefits of Automating Carrier Communication for Shippers

Automating carrier communication does not only significantly reduce the required operational spend per shipment, but it also has several other key benefits, like:

• Speeding up the transportation process, for sending booking requests/tenders, supporting documents etc. directly to another system enabling direct responses, either confirming or declining your request. This process enables shippers to quickly find the best alternatives when needed.
• Increase data quality and avoid errors by automated field completion, data entry/quality checks, and no manual re-entry of data by the LSP.
• Automated invoice audits are also enabled by automatically receiving invoices and matching with the agreed calculated rates, which reduces labor and finds errors in invoices before paying them.
• Increase shipment tracking percentage, by using the information from the booking/tendering process (e.g. carrier reference numbers) automatically in downstream processes for status updates, proof of delivery, etc.
• Automatic shipment notifications and alerts to customers and other stakeholders are enabled by receiving messages from the LSPs. These messages often provide status updates, for example about the final delivery or the ETA, which are not always shared via a public API or website that may be used by some visibility-only providers.

The Need for Broad Carrier Connectivity in Shipper TMS

Although many consider carrier connectivity as the backbone of any shipper TMS, it is often not offered as an included capability across all modes and messaging protocols by all shipper TMS vendors (for example SAP & Oracle have limitations here). Such shipper TMS providers typically provide an API which can be used for LSPs to connect with. But oftentimes LSPs do not have the capability, or intention, to integrate to these specific APIs, given the investment to get them up and running and the ongoing maintenance effort may cause the LSP to lose the shipper’s volume at any time. This means that if you’re a shipper that wants to reduce your operational spend and automate as much as possible, you need to have a partner who builds connections across different protocols and already has a large network of connected LSPs. If this broad connectivity is not already provided in your shipper TMS, make sure to add the required costs when selecting a shipper TMS, so you are not surprised by unexpected costs later.

We at Descartes are passionate about this topic and work every day to continue to further expand the largest connected network available worldwide, which covers all modes and message types. I hope this article has been useful and if you have any questions or remarks, please contact us.