Competitive pricing is critical in the road transportation business, but getting freight right can be challenging – there is a fine line between competitiveness and profitability. That’s why good freight calculation software is a proven way to get a leg up over the competition. But how to define it? What should it offer? How can it help your business? These are the questions we’ll try to answer in this article.
Freight cost management software – how can it help your business?
Freight management software can be a very helpful tool for almost every road transportation company. Rates are calculated automatically, usually using a model that resembles what you may know from taxi companies. Part of the fare is paid for “starting the engine”. The rest of the sum depends on how long the route is.
To work properly, the freight calculator has to be accompanied by a system that automatically plans transport routes, because the route’s length is the main factor contributing to the price. Additionally, such automation can also help reduce the role your employees have in that process, which in turn helps minimize the possibility of human errors.
The transport routes can be planned in a way that ensures the truck will fit under an overpass or isn’t too heavy for a given bridge. In essence, the software can take care of some things that previously relied only on the driver’s experience. This lowers the job requirements somewhat and makes it easier for drivers to work in regions they don’t know very well.
However, the basic freight costs calculation algorithm and the automated route planning are not the end of possible features. The software can also download data from various specialized sources, and take it into account when generating prices. We mean things such as:
- the day of the week (departures on Saturdays are more expensive because the driver has to be paid more during the weekend);
- regional differences (transporting goods to some regions can be pricier if the trucks often drive back with an empty trailer);
- seasonality (the demand in the construction industry is lower in winter, but companies still want to make use of their trucks, which results in lower prices);
- special requirements of specific jobs (for example, two unloadings during one transport run, pallet exchange);
- gas prices, and currency exchange rates (as you probably know, both can have a serious impact on costs).
That’s not all, however. Since the system gathers all the data mentioned above and plans transport routes, it can also be expanded with another very useful feature – monitoring the cargo in real-time. Solutions like this can also be combined with a route planning app for drivers, to broaden the scope of possibilities.
Finally, the software can be integrated with your local freight exchange (like TIMOCOM), to automatically answer job postings with offers containing prices calculated by said algorithm. As you know, in the TSL industry, the quickness of response can often be the factor that decides which contractor will get the job – therefore, such a freight exchange integration can really give you a competitive advantage.
Possible problems with transportation management software – and how to solve them
Quality of data
To fulfill the ideal scenario – an automated system heavily based on machine learning – high-quality data on previous routes, prices, and so on, is a necessity. Unfortunately not every company has enough information (it might be incomplete), so in some cases, the first step will be to get it. However, it’s important to note, that even during that phase, your new software can work in a hybrid model – it’ll be a middle ground between a system operated by people and one based mostly on AI technologies. Of course, the end-game in situations like this is to create a fully automated solution, and the prevalence of machine learning should increase as the project progresses.
Old ways and habits
As someone from the TSL industry, you don’t necessarily have a keen interest in the IT world, and extensive knowledge about it – and there’s nothing wrong with that. You simply focus on other, more important things, such as people and the fleet of vehicles. However, as a result, your company’s existing systems might be based on really obsolete technologies. In the last couple of years, the competition has grown fierce enough that software really started to matter – it’s no longer possible to ignore that area.
That’s why finding a good external vendor is so important. The chosen software house needs to have people with adequate analytical and communication skills – to not only develop a new freight calculation system but also to show you how the new solution will improve the day-to-day operations of the company, how it will make the employees’ lives easier, and why it shouldn’t be feared and rejected.
If you’re afraid your company might become too dependent on the chosen partner, you can always ask the software house to train designated members of your team in the use of technology that’s being implemented. This way, you can be sure your people will be able to operate and maintain the system by themselves when that becomes a necessity. Of course, you need to choose a vendor who’ll be willing and able to provide that kind of service.
How Pretius did it – freight cost calculation software for a big TSL company
A big European company that specializes in overland transport of goods decided to modernize its IT infrastructure. The main goal was improving the system’s efficiency, and updating its architecture. Implementing an automated, full-featured freight cost calculation system, with the capacity to plan transport routes and monitor cargo in real-time, was one of the key ideas.
At first, the company didn’t have existing data of a high enough quality, so we’ve decided the first logical step was to gather it. We’ve improved some of the existing software, and worked closely with the client’s people, to get all the necessary information. The new algorithm is already working, but some employees verify the calculated prices generated by it, just as a precautionary measure.
However, we’re already developing a fully-automated system that – in the not-so-distant future – will be able to use all that gathered information to good effect, without such human supervision. As time goes by, machine learning technologies are slowly gaining ground in our solution, reducing the amount of work carried out by the clients’ employees, and saving time for other priorities, to maximize their productivity.
We’ve also implemented a complex route planning system. We knew from the get-go that a solution like that can’t be based on non-specialized, popular technologies such as Google Maps – you need something that addresses the needs of the TSL industry. In our case, Here Maps seemed like the best choice for the task.
Another option – something to be done in the near future – is integration with the TIMOCOM freight exchange, which will allow the logistic company to quickly react to attractive assignments posted by their clients.
During the entire process, we’ve also upgraded the company’s technology stack and trained the client’s people in the use of Oracle APEX, which the new solution is based on. This way, the client can benefit from using a brand new system and, at the same time, keep his in-house development team happy and in shape.
Conclusion – Easy freight cost management for your company
As you can see, there are many possible benefits to using software that can automatically calculate freight costs. It can make your employees’ lives easier, help you cut costs in various places, gain advantage over your competitors, and offer additional benefits (like the online monitoring of cargo). If you’re interested in such a solution, be ready for one of two possible scenarios. If you have enough accurate and up-to-date data to provide the developers with, they’ll be able to create an automated system relatively quickly. If you don’t, software based on machine learning is still within your reach, but the road towards it will be longer – necessary information will first have to be collected. Fortunately, a good software vendor can help you with improving processes and gathering the data. In the meantime, even a temporary, hybrid solution will offer numerous benefits you’ll be able to capitalize on.
Do you want to cut costs and increase efficiency?
If you want to take control of the cost level, and maximize the profits of your road transportation business, the freight cost management system is the way to go. Pretius has experience in creating such software. Our team of skilled developers and analysts can help find the perfect solution for you. Write to us at hello@pretius.com or use the contact form below – we’ll get back to you in 48 hours. And if you want more information on Pretius projects, check out my other articles:
