The Strategic Business Value Offered by a Carrier Marketplace Services, Part 1
The supply chain execution and logistics market has been transitioning to one that is supported by a broader range of networks. A major shift we see is that companies are becoming comfortable in tapping into networks and platform business models to procure space, resources, freight capacity, and more, on an as-needed-basis.
We recently had two supply chain and technology veterans discuss how Blue Yonder is taking the meaning of carrier marketplaces to the next level for shippers and logistics services providers.
- Keith Whalen, Blue Yonder Vice President of Product Management for Transportation Management
- Andrew Brazell, Blue Yonder Global Lead of The Technology Partner Ecosystem
To watch the session, check out LinkedIn. Below is Part 1 of a recap of the conversation:
Terence: Keith, can you give us an overview of the recent achievements in enabling Carrier Marketplace Services?
Keith: Dynamic price discovery service is a new offerings we launched last year. The goal is to provide a frictionless experience for carriers, marketplace providers and digital brokers: to enable them with the ability to expose real-time capacity and rates. Blue Yonder, through its network platform, provides an ability to enable many subscribing TMS customers to have their capacity and rate requests be routed to one or many different marketplace providers to receive back a dynamic rate and capacity response.
TMS customers can have an API-driven connection to the marketplace, as well as the UI-initiated requests. Customers have really looked to enhance or replace traditional spot market workflows with dynamic price discovery in order to have:
- Real-time observation of market rates much further upstream in the decision-making process,
- The ability to (still) maintain carrier commitments on lanes, and
- The ability to cherry pick rate and capacity opportunities within that scope of demand for improved cost savings and capacity availability.
Similarly, customers can also choose to expose certain lanes or portions of their business to dynamic price discovery as a primary workflow in parallel with traditional optimization rate shopping and tendering workflows.
Terence: Andrew, can you speak about who is participating in the carrier marketplace? And what benefits are being achieved by the customer?
Andrew: As Keith mentioned, participation in our dynamic price discovery is really broad. Blue Yonder manages tens of billions of freight loads each year across hundreds of shippers, which creates substantial demand for real-time pricing. It has led to all types of providers joining the ecosystem:
- Asset-based providers
- Digital brokerages
- Traditional brokers
And then on the customer side, the service significantly eliminates manual processes, improve service levels, and reduces their transportation costs. Customers now have instant access to transportation capacity to manage the business of real-time pricing, which basically gives them a live data feed to market rates. And that allows them to make the most optimal buying decision on the spot market. And more importantly customers are now automating the manual spot buying process.
In the past, you would call or email your provider for a quote and run a freight option, i.e. create hours of manual processes around the spot market. Dynamic price discovery enables customers to complete that same spot buying process in seconds. And its benefits exist not only for the customer, but also for the broker and the carrier; the same manual process of responding to spot requests via phone and email for reverse auctions can all be eliminated with dynamic price discovery.
Terence: Andrew, what are we discovering as we see more companies adopting carrier networks? What are we doing to make our customers more successful?
Andrew: There is a couple of interesting dynamics as shippers and carriers adopt real-time pricing. The first is the shift in the procurement and operational strategy for shippers. Traditionally, a shipper would conduct annual procurement events for contract rates and backup rates. And then they would create routing guides for primary and secondary carriers across the network. However, over the course of the year, those rates no longer represent the market conditions. Subsequently, service levels of tender acceptance drop off, especially for secondary and backup options. With dynamic price discovery, customers are able to move away from those stale backup rate matrices. Instead, they move to real-time rate requests via API. And ultimately, they’re improving their service level. A customer could incorporate rules for moving to the dynamic price option sooner in the routing guide, as well as automate highly variable lanes in their network that go completely dynamic, avoiding operational challenges of covering inconsistent volumes.
The second area of benefit is for both shippers’ and providers’ operations. As they move to real-time pricing, they’re discovering a convergence of these technologies that creates efficiency in the transportation market and in their operations. Previously, a shipper reaches out to their preferred spot carrier, that carrier provides a price to meet their capacity needs, but many times the carrier might not have assets nearby. And it requires repositioning significant deadhead mileage or empty mileage and increases the cost for the shipper. And that disrupts the carrier’s operations and negatively impacts both of their sustainability goals. As customers adopt the solution, they can immediately see real-time pricing of multiple providers and they make a buying decision that not only gives them a lower cost, but it often represents the most sustainable option in their network.
Carriers and brokers are now able to leverage real-time visibility using GPS and ELD data. And that gives them more accurate determinations of their pricing based on availability of assets and drivers and their own network. The real-time pricing adoption ultimately increases the market dynamics of buy and sell decisions, guiding shippers and carriers to more efficient sustainable transportation operations.
Terence: Keith, what additional carrier network related services are on the horizon?
Keith: As we expand our TMS offerings on top of Blue Yonder’s Luminate Platform, we also plan on expanding our parcel last mile and carrier collaboration related services. Carrier collaboration will provide customers a modernized carrier connectivity experience and a more rapid time to value for rate tender confirmation and freight payment signals across the customer’s carrier landscape.
Similar to dynamic price discovery, we plan on providing a network connectivity paradigm for the services and seamlessly connect carriers into Blue Yonder’s TMS customer base. The benefits are improved time to value for carrier productivity, ease of communication and the routing of signals to carrier participants, and allowance for multiple signal types from carriers, whether it be a Blue Yonder configured connection partner configured, or carry yourself onboard. Support for API-based connectivity alongside traditional DDI and other IoT signals for all modes of transport – from carriers and partner live connections – will be supported. We also continue to see heavy interests from existing and new customers on integrated first-, middle- and last-mile needs within a single TMS paradigm.
In Part 2, Keith and Andrew will discuss parcel solutions, importance of partner ecosystems, and the use of AI in transportation management systems.