Optimization - Yesterday's Solution

Tom Livernash - Thursday, September 24, 2015

A few years ago route optimization became “freight planning optimization” when new technology added considerably to the range of transportation options, modes, and carriers that could be considered in one powerful, speedy optimization process.  The old "Route Optimization" process which just looked at clustering LTL shipments into multi-stop truckloads was replaced by freight planning optimization, FPO, which could encompass a full range of options and carriers, including dedicated fleet, multiple LTL carriers, intermodal services to and from with pool points and continuous moves.  Despite this great expansion of the power of automation to speed and improve the transportation planning process, there was one key remaining limitation -- the analysis depended on freight rates retrieved from static rating tables in the host Transportation Management System (TMS).

Enter the new technology of Web Rating.  Suddenly, the rating process itself is liberated from static, possibly out-dated, TMS rating tables.  Over the next four weeks we will explore how this advance in transportation planning and optimization can help you stay on top of the fast-changing conditions in the transportation marketplace.

What is Web-Rating
For a number of years now, transportation planners have been able to get freight quotes directly from a carrier’s website.  Many carriers offer a web portal that allows a user to enter the shipping characteristics of their freight and obtain the estimated charges.  The freight charges may either reflect the carrier’s specific pricing with the shipper, or it may simply return generic or "rack rates".  Normally to get shipper specific pricing with the carrier, the user has a login and password that they must use to access the carrier's web portal.

Generally the portal will return a breakdown of the estimated freight charges.  The breakdown will show the base rate, freight class, applied discount and accessorial charges that are either requested (like sort and segregate) or automatically applied (like fuel surcharges).  Some carrier portals may return additional information such as the address and phone number of the terminal performing the pickup,  by interline carriers.

This method has proven to be both useful and easy for carriers and shippers alike for the delivery of   accurate freight quotes.  The carrier is not required to distribute rating software disks or data tables, and they can keep quotes and other information current.

The problem with using carrier websites is that each web portal must be accessed individually via a web browser, and in most cases each shipment must be entered individually. This manual process is much too slow and error prone to support routine shipment planning when hundreds or even thousands of shipments are being processed every day. 

The solution to the inefficiencies of manual on-line rate lookup is what is referred to as an "API", an "Applications Programming Interface".  A web rating API allows system developers to write programs to be run on a shipper's or commercial software provider's computer which can automatically send shipment characteristics to the carrier's web servers and retrieve freight rate information.  What comes back is the same kind of rating information as with the manual process, but with much greater speed … and the ability to format the results directly into the local computer databases.  This is what we refer to by "Web Rating".  Simply put, web rating is the ability of a computer application to get freight rates over the Internet from another remote computer system.     

Web rating is especially attractive in the LTL marketplace, where rates traditionally have been very complex, and increasingly there are add-ons or "accessorials" which cover dozens of fairly common "special" situations (like weekend delivery or residential delivery) and materially affect the cost of shipping.  Traditionally, shippers or their 3PL partners have taken on the daunting job of keeping all their LTL rates in their TMS system files, working continuously to keep them updated as their contracts and their carrier policies change.  Web rating offers a much simpler approach to ensuring that rates in the TMS and the associated freight planning system are up to date, without the time and tedium of individual rate lookups via an Internet browser.

Next time we will discuss the Advantages of Web rating.

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