We speak to freight forwarders every day, and the consensus is that intermodal hinterland transport management is inefficient. Workflows are characterized by unnecessary complexities, especially as most forwarders have a fully or partially manual setup.
People are creatures of habit, and it is easy to keep doing things they way you have always been doing them. However with change, there is also opportunity for growth.
In forwarding, digitalization is still in its infancy. There is much opportunity to not only set yourself apart by adopting digital systems and processes, but there is much more for you as a business to gain.
In this article, we want to explain how adopting a digital strategy can remove the 3 main complexities in hinterland transport management and thereby greatly improve your operations. For a deep dive on hinterland transport, see our article the 5 main challenges in hinterland transports overall.
First, let us explain what we mean by digital strategy.
What is digital strategy?
Digital strategy is employed by a business who wants to create a plan or a framework to improve their performance by using digital technologies. This could take several forms, such as developing or revamping processes, create new products or services, or changing how you interact with customers.
Ultimately, digital strategy sets the direction your business should take with technology to create new competitive advantage. Additionally, you should specify how and what digital technologies will be used to achieve your business goals.
Keep in mind that a digital strategy should never be static. You need to allow for flexibility in your strategy as technological advancements are made as well as changing market dynamics.
What are the hinterland transport complexities a digital strategy can solve?
There are many ways adopting digital strategy could assist you in your business goals. We will mainly focus on the following:
- Centralize processes related to a large subcontractor network
- Choose the best transport option
- Cost optimization
Let's dive in.
The complexities with a large subcontractor network
A large network of subcontractors involves many positive aspects for you as a business. You will be more resilient with a large network. You will also have a greater opportunity at finding the transport that you need at the right time and the right price.
However, in most cases, every subcontractor have their own processes that you need to adhere to. That usually involves contact channels and methods of communication, capacity booking, and how ongoing transports are managed, especially in terms of delays and rebooking.
Looking at transport planning and booking, you are the one who has to send out multiple email requests to your network. This quickly gets very time-consuming. It is even the case with a small operator and carrier network.
On top of inefficiency associated with these processes, you are also destined for miscommunication along the way. With many documents and messages, it is easy to miss a detail or misalign, especially if it involves email chains shared with colleagues. Delays or miscommunication can become very costly. If they lead to mistakes you will likely have to pay for them, in a worst case scenario it could even cost you a customer.
How can a digital strategy manage a large subcontractor network?
Manual processes tend to slow down the transportation chain, and digital solutions can help eliminate manual intervention. Automation and process streamlining is key to avoid all the back and forth emails and phone calls and the struggles with different documents and spreadsheets.
What to expect from a digital tool for subcontractor management?
As the more technological advancements are made, the market for digital tools and solutions grows. Some systems will be tailored to a niche type of forwarding needs, and some will attempt to be a catch-all product.
These are features to look for when you want to make all facets of subcontractor management more efficient:
- All contacts stored centrally, easily accessed by the entire team
- Store and manage shipment documents centrally
- Consolidated real-time overview of available transport options for a select route and time
- Book transports with the click of a button
- Automate repetitive tasks and processes
- Receive updates about your shipment without having to chase down operators or carriers
Most solutions offer a module approach today so that you can even customize the system to exactly your needs.
Learn more about our solution rouvia and why it is the right fit for a business that wants to centralize operational tasks with full transparency all the time.
Choosing the right mode of transportation
One of the biggest fundamentals of freight forwarding is also one of its biggest challenges for hinterland transports. We are of course referring to the transportation choice. There are several factors to account for: cost, availability, quality, and environmental standards. It’s hardly ever a straightforward choice.
Added, a forwarder must consider the constant difficulties associated with shipping in today’s world. It is imperative to keep up with factors such as social, political, technical, legal, financial, and environmental that all impact the choice of route and method of transportation.
The fact is that a shipment can today reach its end destination through multiple modes of transportation. Your work as a freight forwarder is to select the right one based on above listed factors as well as your customers’ wishes. Sometimes, you may also actually need to advise your customer on alternative solutions depending on the characteristics of the goods.
Choosing the mode of transport based on cost alone is often how we quickly make decisions, but quality and capacity are just as important to factor in when making a choice. A reliable, high-quality service partner that can provide you with the capacity you need is actually key to reduce delays, customer complaints, and unaccounted costs.
Experience is invaluable, but having a digital system could be the differentiator that matters.
How can a digital solution help you with mode of transportation choices?
All the critical factors to consider when sourcing capacity are much easier to track, but also faster to find with a digital solution in place. Using a digital platform for search and booking allows you to filter for common requirements like price, time frames, or mode of transport. This enables you to find the best suited transport option in seconds.
The aforementioned factors of cost, quality, and capacity can easily be controlled with a digital transport platform. When deciding what the right mode of transport is for a particular route, you simply need to enter origin and destination to instantly view a list of available intermodal and unimodal options for a set time frame.
With all necessary information at your fingertips, you can be certain that you are getting the best transportation for your customer every time. A digital transport platform also helps you maintain a high customer experience, as you can provide real-time tracking and data analysis.
Cost structure optimization complexities
Optimizing cost structures in order to maintain profitability as a freight forwarder is of uttermost importance under current market conditions. Many might be quick to raise prices as a way of increasing or even just maintaining a profit margin. The more effective solution is to reduce your costs.
You need to look at both operational and overhead cost structures for the business. Identify which costs could be reduced or eliminated either through modernization or digitization. Attempting to do this without real transparency or visibility over your business and all its costs structures will be difficult.
Cost structures that often can be optimized with added transparency are:
- Demurrage costs caused by capacity not being well-timed
- Right mode of transport and right subcontractor based on cost and capacity
- Transport margins
- Empty container management
Last-minute additions such as demurrage charges can wreak havoc on your carefully planned margins. Ensure that you keep demurrage costs at a minimum by accessing the right capacity at the right time.
Another cost optimization area is related to rate management. So many do not realize the potential in optimizing margins based on a comprehensive cost overview for all transport options. Traditionally, this process has been lacking transparency as either you work with a multitude of contract rates from your subcontractor or with spot rates where you need to contact each operator to receive a price for each shipment. Then add on surcharges and other added costs. Very quickly does one lose track of costs in a manual system, which affects your bottom line.
How can a digital strategy help you with cost structure optimization?
Cost-effectiveness can be found with digital solutions and streamlined processes. It's time to see digital solutions as cost savers, not cost spenders. There are several solutions available on the market to digitalize the various aspects of freight forwarding. Take your time to find what is right for your organization.
Investing in digital tools is a game changer. Depending on the setup and needs of your business, digital technology can automate processes and help your team work more efficiently to reduce costs. It will also provide unprecedented transparency that will help you optimize cost decisions that have direct impact on your business’ profitability.
The overview you can achieve of available transport options with a digital solution is incomparable and ensures you book not only the best option, but you have just shortened the process significantly. However, you will also obtain full transparency on shipment costs, availability, predictive transport times and other deciding factors for transport booking. This is how you ensure you have the right transport at the right time for the right price every time. And, you avoid unplanned demurrage costs.
A digital solution can also help you with forecasting and analysis. With the help of historical data, you can calculate the probability of delays and disruptions for a particular route or mode of transport. Or, you can use reports and analytics for demand forecasting to plan for resources and capacity needs. Or, simply track your financial KPIs as well as transport KPIs to get full visibility of your operations and identify where there is room for improvement or what you are doing really well.
Use a rate management tool to stop manually processing rates in your TMS or struggle with many large Excel spreadsheets. Here, a centralized rate management system does not only save you time, but it almost removes the risk of manual error from the equation altogether.
In summary, adopting a digital strategy that outlines the use of approrpriate digital solutions and revamps olutdated manual processes can make the everyday work of a forwarder faster and easier as well as reduce costs through transparency, automation, and new digital processes.
If you are interested in a solution tailored for rate management, we have an informative guide on how to choose the best freight rate management software. When you want to explore a digital transport platform to assist your team with everyday transport and rate management tasks to gain efficiency and reduce costs, get in touch with us to schedule a free demo of rouvia.