As logistics service providers (LSPs) and shippers embrace real-time freight visibility to drive more agility in their supply chains, I often get asked the question How many carriers are in your network? Alternatively, the question might be Which of our carriers are in your network? These are both good questions, and behind each of them is the over-arching question: Do you have the real-time visibility network to meet my needs? Let’s drill into network size and other attributes to consider to ensure your organization receives the expected value, including transportation mode and equipment type, and network participants.
Network Size is Critical to Managing Peak
Since most shippers typically manage 10s or maybe 100s of carriers, it is logical to expect the network to cover the majority of those carriers, and that a strong carrier enablement program exists to connect the remainder. Carrier networks, however, are never static. Based on performance, geographic expansion, and new distribution channels, the carrier mix is always changing.
I recently spoke to a large retailer that implemented a real-time freight visibility solution for their network. They had strong carrier coverage… until last year’s peak season hit. To accommodate the higher volumes, they added additional carriers. In addition, their contracted carriers had also run into capacity issues and had sub-contracted out to other carriers. Unfortunately, without a large network and ways to rapidly enable carriers, they ended up with no visibility for 25% of their volume. With a larger network, they would have had much more flexibility for peak, ensuring visibility for all shipments moving across the network.
Ensuring Carrier Adoption and Value in Specialty Segments
From the carrier’s perspective, being part of a network enables better customer service and reduced costs. It can be challenging, however, for carriers given that freight brokers and shippers are expecting connectivity with a multitude of portals, point-to-point EDI and connections for booking, status, invoices, proof of delivery (POD) and capacity. With such fragmented means of connectivity, it can be overwhelming. Also, with an increased focus on visibility, it is critical that networks have strong data protection and security for carriers. A large network overcomes many of these challenges, as success draws more carriers to join and the network effect accelerates this growth, it gives LSPs and shippers more flexibility.
The carrier market is fragmented which can not only create challenges in building large networks but can also be an opportunity to leverage the common needs of the various segments, whether flatbed, bulk carriers, etc. Specialty carriers and regional carriers can only afford to invest in the largest networks that will expand their business growth. They may join specialty networks as mandated by a shipping customer, but the lack of comprehensive integration will diminish the value and leave more manual processes—resulting in more errors and less visibility.
Freight Networks Need to Connect All Stakeholders
Transportation is by its nature a multi-party process with many stakeholders. Although each stakeholder is specialized, they all need to work in concert to deliver end-to-end results. Similar to the fragmentation in the truckload market, many other participants play a niche role and gain a huge benefit from participating in a large network. Certain carrier modes like air and ocean have been part of networks for years. More recently, truckload carrier and freight broker networks have formed to provide visibility; however, there are still pockets of stakeholders who are somewhat siloed, including dray and customs brokers. Without these participants, the value for shippers is reduced with too much manual labor that results in errors and delays. Only the largest networks can attract and support all participants.
In conclusion, when shippers evaluate providers who are offering a best-of-breed solution, they need to consider the solution holistically. Providers who claim network size is not important because they will connect the 50 carriers required, risk leading the shipper down a dead-end path. Only the largest networks will attract the scale of participants and can afford to support the connectivity required across the variety of transactions.