Giant freight broker and global freight forwarder C.H. Robinson has launch a new tool it calls Procure IQ, which it says leverages data from its large shipper and carrier community in a way it claims will disrupt the traditional annual bidding approach for buying freight transportation.
Supply Chain Digest Says...
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C.H. Robinson claims that Procure IQ has indicated for some large shippers as much as 60% of their routes would result in savings and/or service reliability by purchasing that transportation through the spot market. |
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C.H. Robinson says that Procure IQ provides data visualization of a shipper's transportation volumes, leveraging its own freight marketplace data, in a way that enables companies to optimize the purchase of freight transportation.
The new no-cost tool is designed for large shippers of US truckload freight, C.H. Robinson says, with tools for shippers to analyze each of their specific freight lanes. That in turn enables comparative pricing, volume and service insights, the company says, which can show opportunities for moving freight via the spot market, rather than solely purchasing transportation lanes in as part of an annual bidding process. The data analyzed includes lane origins, destinations and volume estimates for each pair.
C.H. Robinson argues that shippers lose a lot of time and money in the carrier negotiation processes and then in subsequent administration of the resulting contracts, even as those contracted rates are often not honored if they are low compared to the spot market or a carrier's other contractual customers.
In fact, CH Robinson argues that shippers have not benefitted from broad use of annual truckload contracts even in normal times, and that has been exacerbated here in the pandemic.
CH Robinson says it runs all its shipping data on lanes through its database with input from 200,000 carriers and shippers to provide pricing, volume and service analysis for each lane.
That, in turn, can allow shippers to filter out lanes where they can reduce costs by taking them out of their RFQ (request for quotation) process and instead rely on the spot market, according to the company.
It says, for example, that it is often more cost-effective and reliable to purchase less frequently traveled lanes with real-time rates quotes, while other more frequently used lanes are best purchased through a contractual process that considers both cost and service commitments.
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That change change, in turn, could of course lead to more brokered freight business for C.H. Robinson.
The brokerage firm is hardly the only company moving down this path. As recently reported by TheLoadstar.com web site, last month digital brokerage Convoy released what is calls its Guaranteed Primary service program, designed to replace contract pricing and associated RFQs with guaranteed pricing by offering a fixed margin for carriers on rates that move with the market. Convoy claim its digital network enables it to generate better margins for carriers, which they can share with shippers.
C.H. Robinson claims that Procure IQ has indicated for some large shippers as much as 60% of their routes would result in savings and/or service reliability by purchasing that transportation through the spot market.
The launch of Procure IQ is the latest in a series of digital initiatives by C.H. Robinson, including an alliance with Microsoft and integration of its brokerage platform with 19 TMS and ERP systems.
What do you think of CH Robinson's new tool? Should companies take more advantage of the spot market? Let us know your thoughts at the Feedback section below.
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