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Need a tool to cut rates? Rate-shopping software lets shippers compare prices for trucking and parcel services to get better deals.

Under pressure to lower your transportation costs? Even though you've negotiated some favorable discounts with your less-than-truckload (LTL) carriers and are receiving other pricing concessions, such as Freight, All Kinds (FAK) rates, management wants further reductions in your company's transportation costs. Are there other cost-cutting measures that could help you meet that objective?

More and more transportation and logistics managers are finding that rate-comparison software provides the right tool for the job. These applications, as one vendor's brochure explains, "solve the problem of comparing multiple carriers with multiple rates and determining the best-service/least-cost routing."

You can make and analyze rate comparisons on your own, of course. Without this type of software, though, it can be very time-consuming to put together all of the data you'd need. And think how long it would take to manually compare rates for a large number of shipments going to the various destinations you ship to every day.

The beauty of these programs is that they speed up the rate-comparison process considerably. All of the rates are laid out before you, ready for analysis. The image on Page 54 gives you an idea of what an actual screen looks like.

This screen shot shows each carrier's rate per 100 pounds for the weight break covering the particular shipment being analyzed, along with all negotiated discounts and/or FAK rates. Total charges are shown in the left-hand column, ranked from the lowest cost to the highest.

One thing that really stands out when you do a number of rate comparisons is that no one provider normally ranks as the lowest-cost carrier on every lane. A carrier that shows up as the lowest-cost provider on one lane might be the fifth-lowest on another. That's why it's so important to "lane shop."

Most programs also list each carrier's scheduled transit times. This lets users compare not only differences in rates and total charges but also differences in transit times, helping them determine how much weight to give to each factor.

SOME SPECIAL FEATURES

More than a dozen vendors offer rate-comparison applications. Their basic features and capabilities are similar, but a few of those offerings include some noteworthy features that stand out from the crowd. Here are some examples:

* Zerodown Carrier Select shows the mileage on each rate-comparison screen. It also automatically brings up a truckload charge for every shipment weighing 5,000 pounds or more. If you've worked out a spot rate with a carrier or broker, moreover, you can insert that mileage rate next to the actual miles. The total truckload charge then appears on the screen, showing at a glance whether moving that shipment as a truckload would cost less than moving it by any of the LTL carriers shown.

* Freightnow software includes a "Schedule Pickup" feature. Once the user has selected a carrier, a click on that button will contact that carrier and schedule a pickup.

* Via Ware TMS from Provia Software is able to track accessorial charges. Accessorials can differ drastically from one carrier to another and, depending on the type of shipment, can have a significant bearing on total transportation costs.

Another useful feature of some programs is the ability to generate an appropriate bill of lading for any shipment. Zerodown Carrier Select's software, to name just one example, includes the Uniform Straight Bill of Lading, Straight Bill of Lading--Short Form, and the vies (Voluntary Interindustry Commerce Standards) Bill of Lading. Custom bills of lading can also be downloaded into the program.

Some programs generate daily reports showing the savings accrued by using alternative carriers identified by the software rather than using the shipper's primary carrier for all of those shipments. (See Figure 1 for one real-life example.)

One of the most useful features of some packages is the inclusion of UPS Hundredweight and FedEx Multiweight rates. This allows users to compare the parcel carriers' rates with those of LTL carriers--particularly helpful for shipments in the 400- to 700-pound range, where the Hundredweight and Multiweight services are highly competitive with LTL rates. A few programs even allow shippers to compare charges for small package shipments weighing up to 150 pounds, broken out by the various types of services. You'll be amazed when you see the difference in charges between such offerings as standard UPS Ground Service versus UPS NextDay Air, and all the options in between.

SELECTION CONSIDERATIONS

Before selecting a rate-comparison program, be sure to check out how easy it is to install and how long that will take. Some programs require some advance configuration work by the vendor, while other applications can quickly and easily be added to a computer by the end user.

Consider, too, whether an application is available as a stand-alone product (either computer-resident or Web-based), or as one module of a comprehensive transportation management system (TMS). Don't rule the latter out because it is part of a larger solution, though: More and more TMS vendors are selling their applications on an a la carte basis, so they may be willing to break out rate-comparison modules for individual sale.

And don't forget to look into the cost of purchasing compared to the cost of leasing rate-comparison software. Prices are all over the lot.

Shippers that use these programs usually find that they can realize significant savings. Most software vendors will suggest that you can achieve savings in the range of 5 to 10 percent, but in practice that figure could be considerably higher.

With the economy still in the doldrums, companies will continue trying to squeeze more cost out of their transportation budgets. Because rate-comparison software offers the chance to save so much money, it's a good bet we'll see more transportation and logistics managers turning to those products for help.
FIGURE 1

Carrier Rate Comparisons

      Origin           Destination

Zip      City          Zip      City                 Class    Weight

89431    Sparks, NV    80011    Aurora, CO           50        282
89431    Sparks, NV    84737    Hurricane, UT        50       3505
89431    Sparks, NV    97230    Portland, OR         50       1000
89431    Sparks, NV    95531    Crescent City, CA    50        593
89431    Sparks, NV    95695    Woodland, CA         50       1094
89431    Sparks, NV    95131    San Jose, CA         50        666
89431    Sparks, NV    92881    Corona, CA           50        285
89431    Sparks, NV    95834    Sacramento, CA       50        400
89431    Sparks, NV    91355    Valencia, CA         50        311
89431    Sparks, NV    30024    Suwanee, GA          50        564
89431    Sparks, NV    23060    Glen Allen, VA       50        452
89431    Sparks, NV    95838    Sacramento, CA       50        228
89431    Sparks, NV    97838    Hermiston, OR        50       1077
89431    Sparks, NV    76266    Sanger, TX           50        584
89431    Sparks, NV    93257    Porterville, CA      50        425
89431    Sparks, NV    85043    Phoenix, AZ          50       2110
89431    Sparks, NV    95131    San Jose, CA         50        274
89431    Sparks, NV    95695    Woodland, CA         50       1906
89431    Sparks, NV    90631    La Habra, CA         50        900
89431    Sparks, NV    96080    Red Bluff, CA        50       1172

Carrier             Cost         Carrier             cost

CARRIER B              $52.00    CARRIER A              $58.83
CARRIER B              264.38    CARRIER A              543.41
CARRIER B               77.63    CARRIER A              106.50
CARRIER C               49.94    CARRIER A               72.92
CARRIER B               64.31    CARRIER A               73.80
CARRIER B               52.00    CARRIER A               57.14
CARRIER C               40.69    CARRIER A               52.00
CARRIER C               36.68    CARRIER A               52.00
CARRIER C               45.04    CARRIER A               52.00
CARRIER D               99.54    CARRIER A              124.17
CARRIER B               86.96    CARRIER A              118.48
CARRIER C               36.68    CARRIER A               52.00
CARRIER C               83.61    CARRIER A              114.70
CARRIER D               86.45    CARRIER A              105.88
CARRIER D               43.94    CARRIER A               58.26
CARRIER B              215.21    CARRIER A              267.85
CARRIER C               36.68    CARRIER A               52.00
CARRIER B              102.08    CARRIER A              117.31
CARRIER B               72.24    CARRIER A               89.92
CARRIER B               80.42    CARRIER A              100.06

Total daily cost    $1,626.48    Total daily cost    $2,269.24

Total Daily Savings        $642.76
Annualized Savings     $167,117.60

Many shippers assume that their primary motor carrier will always have
the lowest price. Rate-comparison programs clearly show not only that
other carriers may offer lower rates, but also how much money a shipper
could save by choosing the lowest-cost providers. It's apparent from
this example why "lane shopping" can be a big money saver.

FIGURE 2

Who Offers Rate-Comparison Software?

This partial listing includes some of the better-known providers
of rate-comparison software, along with the name of any stand-alone
products, their Web addresses, and telephone numbers.

CT LOGISTICS
FreitRater
www.ctiogistics.com
(800) 243-4100

DISTRIBUTION SOLUTIONS
Allrate, Netrate, and Negotiator
www:distribution-solutions.com
(614) 833-0150

FREIGHTOUOTE.COM
Freight Now
www.freightnow.com
(888) 595-5664

LAND-LINKTRAFFIC SYSTEM
www.land-link.com
(800) 743-1099

LOGILITY INC.
Logility Voyager Systems
www.logility.com
(800) 762-5207

MANHATTAN ASSOCIATES
www.manh.com
(877) 596-9208

MANUGISTICS
www.manugistics.com
(877) 331-0728

MERIDIAN IQ
PowerTMS
www.meridianiq.com
(877) 285-9126

PROVIA SOFTWARE
ViaWareTMS and ViaWare SPS
www.proviasoftware.com
(877) 776-8421

SHIPMATRIX
Saver
www.shipmatrix.com
(724) 934-9400

TRANZACT TECHNOLOGIES
DirectQuote
www.tranzact.com
(800) 701-8456

TRANSNET RATING SYSTEMS
Net Rater, Quick Quoter, Delta Rater,
and Manifest Rater
www.transnet-rating.com
(952) 653-2600

TSi LOGISTICS
iMpact
www.tsilogistics.com
(770) 474-1555

ZERODOWN CONSULTING
Zerodown Carrier Select
www.zerodownconsulting.com
(954) 753-7006


Ray Bohman is president of The Bohman Group, consultants and publishers in the freight-transportation field. His popular column, Bohman on Pricing, appears monthly in Logistics Management.

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Author:Bohman, Ray
Publication:Logistics Management (Highlands Ranch, Co.)
Date:Nov 1, 2003
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