The use of mobile technology in the transportation industry is shaping how business is done across the whole supply chain. Less-Than-Truckload (LTL) shipment is a sector of the industry that stands to benefit greatly from mobile technology solutions.
What is an LTL shipment?
There are two types of shipments that trucking companies specialize in – Truckload (TL) and Less-Than-Truckload (LTL) (including parcel carriers). TL serves a single customer, shipping freight from origin to destination in one trailer, and doesn’t require any intermediate handling or sorting. Unlike TL, LTL uses the same truck for multiple customer’s shipments; therefore, LTL shipments may take longer to arrive due to multiple pickups and stops along the way. Parcel carriers such as UPS, FedEx, and DHL are examples of LTL shipping companies.
Since an entire truck’s capacity is being hired out, TL shipping is only economical if there is a lot of freight to be shipped. With an LTL shipment, customers pay only for the amount of space they use on the truck, not the entire truck. The rest of the truck’s space is shared by other parcels from other companies or individuals. In this way, the cost of the truck is split among many parties, making shipping a small load affordable.
When dispatching a trailer, it is most optimal to achieve maximum utilization from origin to destination. But “go when full” often isn’t the best strategy. With “go when full,” a shipping company can’t provide a delivery guarantee to the consignee since the truck is stuck waiting until it acquires a full load.
Trying not to dispatch half-full trucks, carriers consolidate freight from several shippers to maintain their market share and to minimize their operating costs. Freight handling and consolidation happens in a hub-and-spoke network, an arrangement that is prefered over direct point-to-point operations.
Hub-and-spoke Network Operation
Carrier operations are managed in an end-of-line terminal and breakbulk or hub. The end-of-line terminal serves as origin and destination for freight that is assigned to a certain hub or breakbulk. From the terminal, the freight is sent to the breakbulk where it is unloaded, sorted, and consolidated with other shipments. After that, the truck goes to the destination hub from where it is sent to the terminal serving the respective destination city.
Since customers only pay for one-way transportation, carriers need to find a way they can either fill the trailer on its return trip or reposition it for a minimum cost. If the decision is made to reposition an empty trailer, most LTL companies outsource the trailers from Third Party Logistics (3PL) providers or transport the trailers back by rail, which is cheaper than driving trailers down the highway. Some LTL companies also use their own tractors to optimize routing of empty trailers.
Challenges of LTL Operation Management
Freight flow is more complex than we’ve just described. In the hub-and-spoke network, the carrier operating costs include sorting costs in addition to transportation. In an attempt to reduce sorting costs, load planners sometimes take the skeletal hub-and-spoke infrastructure and modify it considerably to maximize their truck utilization while still satisfying service constraints.
To support superior customer service while driving operational efficiency dispatchers need to implement a transportation management system that can get the real-time answers to the following questions:
- How do you accept or reject a request from a shipper?
- How do you route a shipment through the LTL network?
- How do you assign shipments to trucks?
- How do you route the trucks?
- How do you schedule the trucks?
- What is the best choice of fill-rate requirement?
- How do you assign drivers to trucks?
A fleet management system can facilitate a shipper’s decision-making process once it has access to the following data associated with LTL operations.
Data Needed for Fleet Management App Development
We’ll briefly describe the most important parameters associated with terminals, breakbulks, shipments, and transportation equipment. This information is necessary for designing a number of software solutions for the LTL transportation sector.
1. Location, specified in terms of latitude and longitude. These parameters are needed to determine the distance between terminals, and to plot terminal locations on the map offered by the carrier planning system.
2. Timezone. If a terminal and a hub are located in different timezones, then a carrier might have an extra hour for sorting. This factor is important for estimating freight delivery time and the time needed to handle sorting at a hub.
3. Number of load doors. This is the maximum number of (or trailers) that can be simultaneously loaded (or unloaded) at the terminal. Fewer load doors may keep freight waiting at the terminal.
1. Sorting capacity (packages per day). Freight in the terminal is usually sorted manually. But hubs typically have automated sorting equipment, which may vary in quality. Better equipment means faster sorting.
2. Sorting cost per package ($ per package). Typically, the sorting cost is estimated based on the amortized cost of the sorting equipment. This parameter should be taken into account, since it will influence the base rate for shipments.
1. Location of origin and destination terminals and the distance between them. The distance between sorting hubs that a shipment must pass through usually under 350 miles.
2. Class of freight. This plays a very important role in the selection of transportation equipment (truck capacity, minimum fill rate, etc.) and sorting methods. The class of freight is determined by product density, value, stowability, handling, and liability. Lower classes represent very dense freight that is difficult to damage and is easy to handle. Conversely, higher classes represent lighter or less dense freight that typically takes up more space.
3. The size of shipments. This can be calculated in various ways. General LTL carriers measure shipment size by either weight or volume. Parcel carriers, such as FedEx Ground, measure shipment size by the number of packages. One of the current trends in the freight transportation industry is dimensionalizing, or using dimensioning machines for precise calculation of the amount of space a shipment will occupy in a trailer.
4. Earliest pickup time and latest delivery time. Motor carriers that work on hub-and-spoke networks don’t guarantee pickup and delivery dates, but they can calculate an estimated transit time that the shipment will take after the request is booked, and determine dates based on that.
5. Transit time. This may include driving time, package handling time at hub (how long it takes to unload, sort, and reload the package) and trailer matching time. Every time freight is consolidated, its transit time may increase by more than 50% of its total travel time causing customer dissatisfaction because of delivery delays.
6. Shipment cost. There are a number of shipment parameters, varying from carrier to carrier, that define the cost of shipping. Truckload shipments, for example, usually set their rates on a per-mile basis or a price per-hundred weight plus a fuel surcharge. But when it comes to LTL, the rate may depend on weight, density, distance, base rates, and also classification of freight. The higher the class of freight, the higher the rate will be.
1. Truck speed.
2. Cost per truck per mile.
3. Maximum sort time at a hub. A package can be tracked every time it is sorted at a hub. If it isn’t sorted within this time limit, a carrier can issue a warning for missing (or lost) packages. This warning can be sent as a push notification to a consignee’s / shipper’s smartphone that has a shipment tracking app installed.
4. Trailer capacity. This is usually measured by the number of packages a trailer can carry. In other words, the estimate of the trailer capacity is based on the historical average size of a package.
5. Minimum load factor. If a truck isn’t utilized enough, then the packages will be held back at the hub and sent after there is sufficient freight to fill the truck over the minimum utilization. The longer a truck is waiting to be loaded, the more unhappy a client becomes. That’s why shippers should optimize their operations and compose a shipment schedule to make sure trucks aren’t delayed for a long time.
What Software Solutions do Shippers Use?
Major carrier companies like UPS, FedEx, USPS, and DHL have their own software development centers through which they develop dispatch, load allocation, and routing management systems. They also use ERP solutions provided by companies like Exact Macola, Sage, Microsoft, and others. These solutions help large LTL companies manage their operations across all tiers of their organization from financial accounting to human resources, from supply chain management to customer relations management and more.
ERP solutions require significant investment ranging anywhere from $150,000 to $750,000 for small-to-mid-sized businesses. Sometimes ERP solutions can be licensed for a monthly fee. All carriers need to customize their ERP solution to suit their company’s specific operations, entailing an additional cost.
Wouldn’t it be better to develop a system using mobile apps that could be customized to satisfy the needs of an LTL company?
Mobile Solutions for LTL Companies
Mobile apps can help to manage transportation processes from end-to-end along the whole supply chain: delivery forecasts, planning, shipment consolidation, and transportation.
LTL planning apps can significantly benefit shippers and carriers, and a number of related apps can work together to streamline their operations. Other useful apps can include shipment planning apps, fleet management apps, asset tracking and management apps, route planning and dispatch apps, LTL logistics mobile solutions for truckers, and more.
Shipment Planning Apps
Difficulties in planning shipments and forecasting orders mainly stem from poor communication among parties engaged in transportation - i.e. shippers, consignees, and carriers - poor data synchronization between systems, and the use of old information. If planning operations are performed manually, this will complicate the whole process and often result in wasted time and resources, as well as lost profit.
Investing in the development of shipment planning apps can facilitate the logistics by automatically turning orders into shipments and determining the best suitable trailer for their transportation. Based on shipment data and historical information the system can evaluate options and develop optimum budgets by modeling various shipment scenarios.
This software solution should have a shipment database that includes planned and actual information on shipments, the orders they contain, their products, when and how they were shipped, and the vehicles used in the transportation process.
There are so-called “Uber for freight” apps like uShip, Cargo Chief, and Cargomatic that match customers with available carriers and provide order tracking. But we can develop a specialized LTL shipment planning mobile solution that will focus on LTL carrier companies.
Fleet Management Apps
After orders are turned into shipments and assigned to trucks, a fleet management app makes it possible for shippers to track and manage shipments through the entire transportation process using their mobile devices. The app can offer the following functionality:
- a real-time map view of the entire fleet
- direct calling and messaging with truck drivers
- vehicle and asset tracking
- violation monitoring
- real-time traffic information
- fleet performance metrics reporting
GPS technology can be used to monitor vehicle location. Shippers can either install wireless units in their trucks or rely on a driver’s smartphone to monitor fleet performance. Data can be sent immediately to dispatchers who can access detailed information on trucks and shipments locations in real time, capture changes in shipment size and destination, as well as monitor driver performance and issue penalties for violations.
Asset Tracking and Management Apps
Shipment consolidation is a big part of LTL operations in a hub-and-spoke network. To maximize container utilization, carriers get new orders from shippers and need to sort them with maximum efficiency. However, multiple break loads add room for error. Routing and tracking of goods can be streamlined with the help of asset tracking and management apps.
At the first terminal each shipment receives a waybill issued by a carrier giving details and instructions for the shipment. This waybill, generally referenced by a barcode, is critical to shipment tracking. Systematic barcode scanning at terminals allows carriers to know exactly when a shipment was pulled from one trailer and loaded onto another. The DHL ActiveTracing app, for example, allows users to read DHL barcodes with a smartphone camera.
RFID technology can also be used to manage the logistics and inventory problems faced by LTL companies. RFID automates the verification of sorting and pooling within a terminal. It also allows for better handling of delays, as RFID enables a faster creation of waybills and delivery notes, ensuring errorless sorting of shipments.
To use RFID, LTL carrier's terminals need to have RFID readers and software installed, and also implement tagging capabilities to tag new shipments and follow up with them through the LTL network. Contrary to a barcode scanner, a tag reader can read multiple tags at once as long as they are within its transmission field.
Readers can be fixed, at portals or at a storage area, or they can be mobilized in handheld devices or on vehicles. There are several types of RFID readers that can be connected via USB and others, like Zebra’s Sled Reader, that connect via Bluetooth with iOS and Android devices. Bluetooth readers can transmit data to a mobile device, which can then forward that information to a server. The app that connects with this server can offer asset tracking and management functionality using information captured by the RFID reader, and also barcode scanning features for shipments that don't have RFID tags.
NFC in Android can also work with quite a few RFID tag types, even though NFC and RFID use different protocols for transmitting data.
Read also: Diversification of iOS and Android platforms
Customers need a solution that can help them stay up-to-date on all of their shipments. In other words, a mobile app oriented at shipping customers should allow them to do the following:
- Request a driver anywhere and at any time.
- Get instant rates. For example, with ShipHawk users only need to provide basic information about the unpacked (or packed) item and ShipHawk does the rest – comparing rates from an extensive network of parcel and freight carriers to determine the best pricing option for shipping this item. ShipHawk offers an API for on-demand shipping quotes and automated dispatch.
- Get pick-up and drop-off locations.
- Ask and answer questions about the shipment.
- Track the shipment in real-time on a map.
- Monitor shipment status and get alerts in case of any changes
- Pay securely with the app
These are just some mobile solutions that can address the needs of LTL companies.
Read also: How to develop Uber for Trucking
The trucking industry is plagued with inefficiencies and structural mess. LTL shipping companies can gain in efficiency, overall shipping speeds, and customer satisfaction with mobile technologies supported by solid backend infrastructure.
Mobile technology supported by a solid backend infrastructure is a great chance for LTL shipping companies to gain in efficiency, overall shipping speed, and customer satisfaction.
Read also: Price of creating a mobile application