When it comes to Big Data in shipping and logistics, it is all about the variety and velocity of the data. Each mode of freight—small parcel, LTL, Truckload, Ocean, Air, Expedited, etc. — has a unique set of data points that affect how the freight will move. The faster you can receive the data, the more valuable it is. Shippers want to know as soon as possible if a shipment is going to be late. Shippers also want to collect the data required to tie the freight cost back to their order data so they can measure their total cost to serve a customer. Carriers want to know as soon as possible what they have to pick up so they can plan their routes. A carrier also wants to collect the characteristics of the freight so they can measure their total cost to serve the shipper.
Carrier-supplied Software Sets Big Data in Motion
Speed and a certain level of visibility are expected today by carriers, shippers and consumers. However, not that long ago, shipping and logistics management was very manual and the rate of information flow quite limiting. Carriers did not have visibility to the freight they were picking up until it arrived at their terminal. Shippers did not know when a shipment would be late for a delivery until a customer called. I remember in the 1990’s when UPS & FedEx used to collect a paper manifest that included a detailed listing of all the packages they were picking up. This report was then brought back to the terminal where it was keyed in by several people, and that’s how they used to invoice the shipper.
Big Data may have been pioneered by RPS (now FedEx Ground) and UPS was right behind them. They collected the shipment information they would use to do route planning and invoice creation. The first types of software to handle this data were developed by the carriers. This allowed the carriers to provide free software to the shipper who would send this data to the carrier for route planning and invoicing. Today the carrier-supplied software is virtually unchanged, however you now have many 3rd party providers that offer a multi-carrier, multi-modal solution that exchanges data between the shipper and carrier in near real-time.
Big Data Serves Two Masters –Shipper and Carrier
Big Data has had a profound impact on the carriers that have embraced it. UPS is a prime example of how you can gain a huge competitive advantage by leveraging the data. Their free system certainly allowed them to optimize their routes better, and gain insight into their customer’s (the shipper) tendencies. I believe that every decision that UPS makes is based on the data and what it’s telling them.
And on the other side, Big Data allows the shipper to have a very objective discussion with the carrier. The shipper can now ensure that the carrier will receive the freight that they want at a cost that is fair for both sides. The carrier is confident that this will happen so the carrier can remove any risk in their pricing equation.
Big Data Offers Opportunity
Big data helps shippers understand where opportunities exist for efficiency and cost savings. It takes the guess work out of the equation. Having the freight cost matched to the order data, a shipper can now make an accurate and precise decision over how they can optimize the freight cost. For those companies that are not incorporating Big Data into their freight management, they are left unable to answer questions such as “Why? Why is the carrier raising my rates? Why are my freight costs going up?”
In the near future, the use of Big Data can bring even more change. I see that shippers and carriers will partner based on the data. The shippers that have good clean data that is shared with the carrier will be deemed to be shippers of choice, because the subjectivity of their decision making is gone, and it will all be based on the data.