Automated rate management comes of age
When the ocean shipping e-commerce network INTTRA announced a new partnership with the rate and contract management solutions provider Catapult International in late April, it seemed like significant news.
The merging of INTTRA’s ocean schedules and booking modules with Catapult’s rate engines provides a perfect match for freight forwarders and non-vessel-operating common carriers tasked with providing up-to-date rates to their shipper customers.
But it’s important to remember that INTTRA, a very partner-friendly vendor, has taken a similar path before. In 2012, it cemented an agreement with CargoSphere, another provider of rate management solutions.
The buzz around Catapult’s partnership with INTTRA is more an indication of how far rate management solutions have come, and how integral they are becoming to savvy third party logistics providers.
Simply put, companies that rely on spreadsheets, faxes, phones, and handshakes for up-to-date ocean rates are not getting truly up-to-date ocean rates.
“There’s so much technology available out there, so many ways to make processes more efficient,” CargoSphere President Neil Barni said in a conversation with American Shipper. “This seems like one of the last places in the industry where there’s real opportunity to make an advance.”
Indeed, Barni has been eyeing the opportunity for the last decade, realizing early in the development of his company that a network of rates would be the most powerful way to automate things.
“People don’t want to log onto six systems to get their rates,” Barni said. “People need to be on their own system, managing their own rates and contracts.”
The CargoSphere model, as we’ve written about before, makes the dissemination of ocean (and air) rates look and feel somewhat like Facebook. A party only includes partners in its rate network that it wants. This effect is becoming so pervasive, he said, that CargoSphere is selling its system in clusters of companies that want to work together.
Barni said CargoSphere’s next push will be to bring ocean carriers directly into the process. As of now, carriers’ rates are brought to the network via global, regional, and local forwarders and NVOs.
But bringing vessel-operating carriers directly to the CargoSphere network would increase rate accuracy and be a boon to those carriers’ customer service endeavors, Barni argued. The thinking is that rates and contracts are amended so frequently that shippers, forwarders, and NVOs have a hard time keeping pace.
“There’s a benefit to the carriers joining the network,” he said. “Often, the receiver of the contract has no idea what the amendment to the contract is. Carriers are using the tool as a new rate distribution vehicle, because, let’s face it, by the time someone looks at a file, those rates are dead on arrival, they’re obsolete.”
Tools that empower companies to bring processes in-house are percolating throughout supply chains, from demand sensing to warehouse management to rate procurement and management, through to final payment for services and raw materials. In terms of transportation functions, the decision lies with the company – whether it’s a shipper or logistics company – as to how much they want to handle in-house.
But the technologies available today are enabling processes once considered too labor intensive, or just plain complex, to be handling internally.
Barni spoke anecdotally of a potential customer convinced it could not manage its own rates and then changing its mind within the course of a two-hour demo of the CargoSphere system. That’s a pretty major strategic shift to make on the fly, but an example of the power of some of the tools out there.
A big part of that power comes from new algorithms and mapping architecture that allows different formats of rate documents to be seamlessly homogenized within a single system.
Catapult has been refining its capability in this regard, releasing a tool called Spring Board in February that maps bids and requests for quotes with little effort.
CargoSphere’s Smart Upload and Diagnostics Solution (SUDS) allows rate managers “to find and define any pricing term in a file and convert that text into dynamic rate data.” Barni calls it “dealing with contracts as they are,” not trying to shoehorn data in a specific template. He also said it’s about “getting rates out of a static format” and into a format that makes the information usable.
With regards to SUDS, this is where the “diagnostics” comes in. It would be impossible for someone to eyeball rates from multiple carriers and NVOs in spreadsheet form and decipher minute variances.
INTTRA, for its part, has been working on similar mapping technology for invoices and other key ocean documents, making its strategic agreements with Catapult and CargoSphere all the more powerful.
You don’t absolutely need a specialized tool for rate management to start leveraging the benefits of automation. There is some capability built into most transportation management systems and platforms designed to automate procurement. But a best-of-breed approach dictates using one of the numerous purpose-built software-as-a-service rate management systems. As Barni puts it, “we’re not trying to be a TMS provider, we’re focusing on the rate space and our investment has been in technology, not services.”
No matter the system, the point is that advances are coming fast and furious in the realm of data standardization. This is not standardization from the standpoint of a software vendor decreeing that information must come in a certain format. This is standardization enabled by systems that take disparate forms of data and make their output look the same.
Powerful stuff indeed.
This article was published in the June 2014 issue of American Shipper.