What is Freight Management and How Does it Work?- GoComet
While we all may have left 2020 behind, the truth remains that the havoc wreaked by the COVID-19 pandemic last year will continue to impact businesses in 2021.
As organizations work toward overcoming the setback and bouncing back more robust, there’s an inherent need to adopt new and smarter approaches to supply chain management.
In this article, we talk about a new approach to freight management and how shippers can leverage various freight logistics solutions available today to save freight costs, enhance customer experience, and build supply chain agility.
What is Freight Management?
Freight management is an elaborate process that involves overseeing and managing the delivery of goods. For example, it ensures that the cargo reaches its destination on time, in the right condition, and cost-effectively.
Freight management is a part of the whole supply chain management process, an even more elaborate process. If you’re a shipper you can choose to outsource all the processes involved in supply chain management or one of them; for example freight management.
But first, let’s take a look at everything that’s included in freight management:
Carrier Selection
When you work with a third-party carrier, you need to ensure that the freight rates you are paying are reasonable. Besides, it should have schedule reliability and must meet your requirements well.
Route Optimization
Route optimization involves determining the most cost-effective and fastest route for each mode of transport and choosing the mode best suited for your shipments.
Documentation and Regulations Management.
Shipping goods is a documentation-intensive process. Putting together relevant information and complying with appropriate government regulations is an integral part of the shipping process.
Shipment Tracking
Tracking and tracing shipments involves gaining visibility over the movement of your shipments. It implies that you have access to the real-time location of your cargo round the clock.
Data Collection and Analytics
With the emergence of intelligent and innovative solutions, you can leverage data better than ever before. New age freight management systems capture and analyze several data points and provide instant actionable insights to optimize your freight management.
Let’s overview each of these tasks, how you can plan them, and what systems can help you.
Vendor and Carriers – Selection and Management
Depending on the size of your organisation, your goals and capabilities will vary. So will your approach towards optimising freight operations.
Owning the Carrier:
For some organisations, having a private carrier is the most effective way to transport their goods. This is true, especially for big companies with high volumes. The model is widely used for road transportation.
Using Third-party Carriers:
The most preferred approach for sea and air freight is to use third party carriers. Most companies can’t afford to have their vessels or aircraft, so this is the most viable option.
However, even for road transportation companies often get into contracts with service providers such as FedEx, UPS, DHL, etc.
Freight Brokers and Freight Forwarders:
The critical difference between freight brokers and forwarders is that freight brokers’ role is limited to helping shippers connect to carriers and find good deals.
A freight forwarder can play a more active role in freight management by taking care of packaging, warehousing, rate procurement, documentation process and more.
The best way to efficiently manage vendors, carriers and brokers is to adopt a Transportation Management System (TMS). It’s an easy-to-use software tool that simplifies your freight management on several levels.
You can learn more about GoComet’s innovative TMS for international freight here.
Route Optimisation
Following are the three ways in which shippers and carriers can ensure cost-effectiveness and efficiency while shipping goods from point A to B:
Route and Schedule Optimisation
With the help of route and schedule optimisation tool, you can determine the best possible route for your shipment on a given day. Based on your vehicle’s limitations, destination, traffic and weather conditions, etc., these tools help you choose the most efficient route.
These systems can be integrated with your TMS and can allow you to optimise your shipment scheduling process as well. In effect, the system will make it possible to schedule your shipment at the best time and identify the best possible route for you.
Load Planning
The idea behind load planning is to transport more cargo while minimising the space it occupies while in transit. Load planning should complement route optimisation as you need to consider the order in which your team unloads the items.
Multimodal and Intermodal Optimisation
Multimodal shipping means using a combination of two or more modes of transportation. In some cases, multimodal shipping is faster and cheaper. For shippers who use third-party carriers, it’s the same as single-mode transportation as it’s all in the control of the same vendor you’re working with.
On the other hand, intermodal transportation is where shippers choose different carriers for each route. They select these carriers based on factors such as rates, transit schedules, or even sustainability. However, intermodal transportation can be stressful for the shipper as there’s an increased responsibility to coordinate between multiple parties, manage their contracts etc.
Documentation and Regulations Management
Documentation management and ensuring compliance with government regulations is a huge and integral part of freight management.
Claim Management
Freight claims ensure that any third party you’re working with, be it the freight forwarder or carrier has monetary responsibility in case of cargo damage or loss.
It’s best to have a system in place that digitises the process of claim management. This helps you react to damage within the standard three days time and receive reimbursement quickly.
Tariffs and Regulations Management
Some of the documents concerning shipping are bills of lading, waybills, packing lists, certificates of origin, dangerous goods notes, etc. Each of these is crucial in their own right.
TMSs offer dynamic interfaces that allow shippers to ensure that their shipments are compliant with government regulations and other trade agreements.
Accounting
Freight accounting involves receiving freight quote and freight cost, receiving and processing invoices, freight payments, etc.
The emergence of systems that automate freight invoicing has paved a new way to ensure accurate, efficient and quick invoice processing.
Tracking and Tracing Shipments
Tracking shipments refers to the process of determining the physical location of the goods in transit. You can track shipments in real-time and get automated updates with the help of different tracking solutions available in the market today.
Vehicle Tracking via GPS
A GPS receiver is attached to the vehicle, and it sends location data to the parent company via telecommunication technology. It makes live tracking of the vehicle’s movement possible. Besides, if combined with electronic logging devices (ELDs) and telematics, it can also offer information on fuel consumptions, the temperature inside trailers, open door sensors, toll records, driving style, etc.
Vehicle tracking is useful for general visibility. It helps prevent delays and enables you to share tracking information with clients for their specific order.
Package Tracking via Barcodes and RFID
In case of package tracking, each pallet, parcel or container is assigned a barcode or RFID chip. The cargo gets scanned at different points in its shipping journey, and concerned parties are informed about its status.
Package tracking is useful for gaining in-depth visibility. The data captured can be analysed and used to gain insights.
Data Collection and Analytics
The key to better planning and optimising costs today is data-driven supply chain management. With a credible system in place to capture data, process it and offer actionable insights, you can do away with guesswork while making important decisions.
From which vendor and carrier to work with to the best time to schedule a shipment, best possible routes, etc., accurate data analytics can make all the difference to your business.
Rely on Intelligent Technology
When customers are demanding faster deliveries at a lower cost, businesses should adopt a collaborative approach and rely on freight management software to ensure operational efficiency. As the industry continues to evolve rapidly, it’s crucial to leverage automation technologies and strengthen your supply chain for the future.
If you’d like to learn more about how GoComet’s TMS for international freight management can help you save costs and drive process efficiency, reach us here today.