In the past, the precursors of true Freight Optimization systems, so-called load or route optimization systems, considered only one LTL and Truckload rate and service for each shipment during the optimization process. Freight Optimization applications were fed these rates from either internal rate tables, or tariff bureau supplied electronic tariffs. The advent of Web Rating Quote APIs in conjunction with multi-mode multi-carrier optimization has dramatically expanded the number of options that 4th generation optimization systems can consider. Now Instead of considering only one set of LTL and Truckload rates in an optimization run, multiple carrier rates and modes services can be considered. Web Rating APIs provide these problem-solving applications the ability to reach out and dynamically acquire various rates and services in real-time.
Rating API has been around for more than a decade, but its importance to freight optimization systems has become particularly relevant for many reasons. First, Truckload and LTL carriers are turning to dynamic pricing rather than set contract pricing. Carriers are evaluating their needs, and their pricing fluctuates with the demands of the market. For the shipper, to get the best rates, they must constantly be making inquiries of carriers for quotes that are good for a limited time period and are only good if the shipper provides validating references such as Quote Numbers. Carriers are also offering variable pricing based on the requested service levels. Service levels such as guarantee delivery, variable transit times, expedited services, and team services are all priced at different levels. One primary LTL carrier offers up to twelve different service options in their web rating API.
While both dynamic pricing and variable service level pricing create new opportunities for reducing freight costs and improving service, they also significantly complicate the individual dispatcher’s task of determining the right combination of service providers. Freight planners working with a traditional freight optimization system can not evaluate all these cost factors for every shipment. This results in quick “rules of thumb,” which often will fail to minimize total cost or arbitrary selections from a limited number of carriers. Since most freight optimization is cost-driven models to be of the most significant benefit, freight optimization systems require access to various carrier rates and services. The means of accessing this information may not be easily acquired.
This has changed dramatically over the last few years, and Web API allows PlanTools™, a full-fledged Freight Optimization system, to consider multiple Truckload and LTL carrier rates, transit times, and a wide variety of accessorial charges and equipment on a shipment-by-shipment basis. Dynamic access to this broad spectrum of rates from multiple types of carriers allows PlanTools™ to optimize the actual selection of the mode of carriers and the actual carrier rates in real-time.