Working with a third party logistics (3PL) provider or freight brokerage for the first time can feel like an uncomfortable leap of faith, particularly if you do not understand how your new cargo shipment service will work.
It helps to know how a freight broker works and what you can expect for your fee from value-added services offered by those transport and logistics (T&L) companies who harness the power of the internet of things (IoT) and smart transport management systems (TMS) with machine learning to optimise what they do.
There is your first lesson, right there. There is a lot of jargon, reflecting the complexity of cargo shipping that seems on the surface to be becoming more complicated. It need not be like that if you choose the right partner, or even if you are considering investing in some customisable TMS software of your own to bring some expertise in house.
Puzzled By What Your Transportation Brokerage Partner Does?
We’ll keep the process management system as simply as we can by taking you through an average shipment handled by their 3PL supplier.
Shipping Order Tendering
It begins with the business needing to ship cargo calling the freight broker, who has access to a vast supply chain network of service providers across transport modes and warehouses.
The tendering for the work is now semi-automated via TMS systems which speed up what was previously an extensive paper trail. The preferred 3PL freight carrier(s) will be notified of the customer’s contact details, desired initial time and location for pickup, destination and even deadlines.
All of the necessary information, such as dimensions and special packing or handling requirements are part of the initial data collection process the business initially goes through with the broker.
The broker will notify their freight carrier supply chain of cargo details along with compliance standards, necessary equipment and consignee preferences. TMS systems simplify and automate much of the data collection and sharing process, which massively speeds up the logistical process. With templates for making the initial assessment of load through to route planning, invoicing processes, insurance, regulatory compliance confirmations and all associated document generation, user-friendly interfaces of TMS break down every aspect of transport management to minimise or eliminate risks of human error which can slow down a shipment.
With current electronic data integration (EDI) capacity and application programming interfaces (APIs), communications between shipping partners become much more transparent, allowing customers to track progress of their shipment throughout. 3PL service providers no longer have to manually email or make phone calls; information is automatically generated and shared with their transportation partner.
Optimal Freight Scheduling
The 3PL TMS receives the above data, and depending upon their particular IT capacity, automatically schedules and confirms precise shipment pick-up and delivery times. The broker, however, will generally select 3PL partners who conform to best practice standards of using compatible data transfer systems, so that communications and freight management run as smoothly and predictably as possible.
The 3PL provider’s value lies in either their expert driver team and fleet, or their ability secure qualified transportation by booking another appropriately skilled carrier.
The freight brokerage’s value is based on their network of reliable, vetted carriers, relieving businesses seeking shipping services of the inherent risk, time and headache of inappropriate service bookings. Understanding the technical capacity of freight handlers and carriers is not only about the regular maintenance of truck fleets and the expertise of their drivers, but also about their back office systems that simplify route optimisation and speed up document administration, as well as offering discounts from economies of scale or loyalty bonus schemes.
Companies who expect to be regularly shipping in future can also adopt some integrated TMS software modules of their own to enhance their future distribution strategy. This offers ways to standardise data transfer for consistency, accuracy, speed and compliance.
For instance, businesses should be confident that their transportation supply chain has:
- Appropriate equipment that is regularly well maintained, cleanly presented, free of contaminants and is up-to-date; this is becoming increasingly important in terms of e.g. emissions
- The driver of trucks, container ships, or air cargo pilots have current, valid licenses, insurance coverage and digital document transfer capacity for smoother operations
- Expertise in handling special requirements e.g. dangerous loads
- Committed to the mandatory timeline and has the required capacity available
Upon shipment pick up, a 3PL connects with their delegated driver, double checking all their important information: name, truck and trailer type and details, smart-phone app connectivity and their current location and load status. Shipment handling requirements will be reconfirmed, along with cargo pick-up information.
The 3PL service remains in contact with the carrier during loading, ensuring completion of checks that all freight has been put on the trailer, that the trailer is securely locked or sealed and the carrier has signed the Bill of Lading (BOL), which confirms possession and liability for the freight shipment for their leg of the cargo’s journey.
Road freight truck driver’s will verify the ‘skid and case count’, (pallets and packages) vis a vis the original order. They also confirm the destination detailed on the bill; these checking systems ensure the vehicle is actually loaded with correct freight, to avoid the need to backtrack later to resolve mistakes that can blow schedules, add to costs and cause unnecessary problems for the shipper.
The contact between 3PL provider and driver is regularly maintained throughout transit of the shipment.GPS tracking technologies allow for immediate, up to the moment tracking of the location of the delivery vehicle and even the driver. The 3PL company can alter driving directions where necessary due to unforeseen route based problems and liaise with the shipper regarding any issues on route, such as traffic or weather delays.
Delivery and Unloading
Upon arrival at the final destination of the load, the driver must document the arrival time in case there is a problem with detention; if the carrier waits beyond a certain time limit, they can be charged, for instance. This logging can be a matter of a push button notification on their smart-phone app and this will be checkable via the 3PL provider’s TMS dashboard.
Once fully unloaded, the recipient of the shipment (the consignee) signs the Bill of Lading, noting any overage (surplus), shortages, or damages (OS&D). Signing off here is accepting possession of the delivered product, with all the associated responsibility. The consignee documents on the bill of lading what time the unload was completed. This is screen based with digitised systems.
The 3PL awaits the updated cargo status from the carrier via an invoice, proof of delivery (POD) and any other documentation. This is a digital data transfer.
Once the carrier’s invoice is received by the 3PL service, along with all necessary accompanying documentation, invoice processing is set in motion. This depends on inclusion of the following documents:
- Lumper receipts
- Driver work receipts
- POD / BOL
- Rate confirmation
According to PWC surveys of CEO’s of transportation companies, shippers can expect a lot more accountability and insight into the transfer of their goods, as well as enhanced performance due to the increasing digitisation of freight shipping:
“CEOs feel a sense of urgency about updating their legacy IT systems, which have suffered from a lack of investment in recent years and are more vulnerable to cyber threats than newer systems.”
For those freight shipping companies, brokerages and carriers, if digital transformation of back-office systems has until now been ad hoc, or data transfer is not a smooth process, it is worth investigating the latest, more secure, comprehensive and integrated options possible through customisable TMS software that can not only simplify operations, but also help achieve greater savings and competitiveness long term.