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3Gtms' Mitch Weseley and Geoff Comrie featured in Transport Topics

11/10/14 2:37 AM | Thought Leadership 3Gtms' Mitch Weseley and Geoff Comrie featured in Transport Topics

3Gtms Mitch Weseley and Geoff Comrie featured in Transport Topics: Shippers Nudge Carriers, Brokers to Offer Expanded Service,

Shippers Nudge Carriers, Brokers to Offer Expanded Service Menu

Shippers are asking carriers and logistics companies to handle their entire books of freight, with truckload, less-than-truckload, intermodal and parcel deliveries in the mix, transportation software makers said.

Hundreds of orders may be handed over all at once, which presents a set of challenges that is a world apart from the work of finding the best way to handle a much smaller volume of truckload orders transaction by transaction, industry experts said.

“This trend wasn’t so strong five years ago, and it didn’t even exist 10 or 15 years ago,” said Mitch Weseley, CEO of 3Gtms Inc., in Shelton, Connecticut. “Transportation and technology have changed dramatically — shippers are asking for a broader range of services.”

And technology providers are responding with transportation management systems that help create the most efficient plan for getting each delivery to its destination on time. TMS use freight and planning optimization tools and also can automate load tendering and billing, optimize bid procurement and streamline onboarding of customers and carriers.

Three companies that are providing TMS to logistics firms are MercuryGate International of Cary, North Carolina; McLeod Software of Birmingham, Alabama; and 3Gtms, which recently announced a partnership with Cleveland-based TMW Systems. The TMS from these companies are cloud-based, which allows the technology providers to provide upgrades easily.

The move to offering a broader range of services began with a convergence between the asset and non-asset sides of the freight transportation industry, said Geoff Comrie, Executive Vice President of Business Development at 3Gtms.

“Previously, the manufacturer might use several different transportation companies, but they’re now looking for one company to do it all,” he said. “The carriers are adding brokerages, and then they’re adding the ability to do LTL and complete freight-management services.”

In fact, the very landscape of the industry has changed, said freight-transportation consultant David Roush, president of KSM Transport Advisors, in Indianapolis.

“The market was once highly segmented,” he said. “Carriers, brokers and logistics providers were well-defined verticals, but today the lines are blurring and have become squiggly.”

And if a shipper decides to stop managing its freight internally and hands it off to a logistics company, the carrier that has been hauling a large volume of that freight is suddenly at risk of losing a critical account, said Mark Cubine, vice president of marketing for McLeod Software.

“In that situation, the carrier might choose to gear up and start providing a complete line of logistics services for that customer,” he said. “This is one way to protect your relationship with important customers.”

Roush pointed out the role played by technology providers. “Advances in technology have enabled all of this,” he said. “Back in the day, carriers didn’t have access to the tools that a modern TMS provides.”

Conversely, the technology has changed in response to the evolving landscape of the industry, Comrie said. “Carriers and brokers have been going to their technology providers and saying, ‘I need you to also provide comprehensive LTL because, although my business has been transactional to date, I need to provide logistics services,’ ” he said. “So it’s getting less transactional and more service-oriented.”

However, the goal of expanding the scope of services is not shared by all. “Everyone is trying to be everything to everyone,” said Bobby Harris, president and founder of BlueGrace Logistics, in Riverview, Florida. “We love seeing the competition make that mistake. Rock stars want to be athletes, and athletes want to be rock stars. You see the same thing in transportation. Although a TMS has the functionality to do so many things, you have to stay away from trying to be all things to everyone.”

Harris’ advice to carriers or brokers who are thinking about entering the 3PL space is to be certain that their customers are demanding it. “There’s a reason that McDonald’s doesn’t start offering seafood,” Harris said. “It’s just not what their customers are demanding. Don’t expand for the sake of expanding. You lose the integrity of your brand. I’ve seen that mistake over and over. Size is not strategy.”

That said, logistics companies that already are handling truckload and LTL are hearing requests to add parcel delivery, thanks in part to the massive growth of online shopping. And whenever something is purchased online and a parcel-delivery service brings it to the consumer’s house, that’s one more piece of freight that wasn’t part of an LTL shipment to a retail outlet, said Bill Sandberg, chief information officer at Network FOB, a logistics and freight forwarding company in Jacksonville, Florida.

“This is a can of worms that is creeping up on the logistics industry,” he said. “If you look at the globalization of the [business-to- consumer] supply chain and the impact of [online sellers] Alibaba and Amazon and eBay, one thing is clear: Parcel service is growing. When you order something from Amazon, it’s coming from a regional distribution center or directly from the manufacturer. A lot of the product is moving from those segments of the supply chain up to parcel distribution, so parcel distribution is indeed creeping in and taking an increasing portion of the freight market.”

While his agents have not yet moved heavily into handling parcels, Sandberg thinks this service is coming to the entire industry. “It’s too big to ignore,” he said. “If you’re handling the traditional part, why aren’t you managing the last leg of that shipment if it is parcel shipment?”

Sandberg also noted that the distribution network always will provide substantial linehaul opportunity for traditional freight companies. “That opens the door to satisfy your customers’ needs,” he said.

And TMS system providers are aware of this trend.

“Some companies want to be able provide every mode of transportation — parcel, LTL, truckload, intermodal and air — both for the domestic United States and internationally,” said Dan Sellers, 3PL solution consultant for MercuryGate, noting that TMS software needs to provide all of this functionality across the entire customer base.

Comrie agreed that there is a growing demand to handle parcels. “Customers are forcing freight companies to do more, and this means the combination of truckload, LTL and small-package,” he said. “You have to deal with it combined, or you end up with a poor load plan, thus wasting a tremendous amount of money.”

Another function of a TMS system is to optimize the bid-procurement process when a shipper is asking to have a book of freight managed over a specified time period. For example, if the goal is to line up carriers for specific lanes and lock in rates for shipping freight over the course of a year, the system will send bids out to carriers, collect their responses and generate an optimization plan for awarding lanes, said Cody Arnold, general manager of shipper and 3PL services for McLeod Software.

“The bid-procurement optimization tool considers all of the constraints you specify and awards freight to carriers in the most efficient manner possible,” Arnold said. “The optimizer is highly adaptable, based on your preferences. For example, if you own assets, you can push the maximum volume of freight to your fleet.”

The systems also can help streamline rates, said Steve Kapsner, a consultant to Sam Dunn Enterprises, a logistics service provider in Longview, Texas. Kapsner is the former president of Sellers Logistics, a 3PL created by P&S Transportation, in Birmingham.

“The bid-optimization tool allowed Sellers Logistics to convert almost all of a customer’s freight into stable contracted rates,” Kaps-ner said. “By removing a large volume of freight from the spot market, we created significant savings and established a strong network of preferred contracted carriers. The system gave us concrete figures for costs, savings and service. We could show our customers exactly how much money they were saving and how their service was improving.”

Kapsner previously has managed freight logistics for Smithfield Foods and Pilgrim’s Pride. Sellers Logistics has no affiliation with Dan Sellers from MercuryGate.

Carriers and brokers that decide to enter the logistics world may find the transition daunting, said Cubine. “For carriers and brokers who haven’t done business as a 3PL, there’s a lot to learn,” he said. “We help people learn the tools, the approach, the process and more so that they can take baby steps up to the summit of being able to manage a book of freight.”

Comrie said that 3Gtms’ customers generally have some knowledge base, but it may not be extensive. “Our training encompasses everything from understanding your LTL agreements and translating them to a TMS through on-site sessions teaching their salespeople how to sell the advantages of the technology,” he said.

The training offered by MercuryGate includes best practices about managing the software. “We educate customers on the features within the application that help them to sell themselves within the business,” said Hope Federer, brokerage solution consultant for MercuryGate. “We take it from an application standpoint. Over the time we’ve been in the software industry, we’ve acquired best practices, as far as the application goes, that we can offer to customers who are expanding into a new area of the industry.”

Transport Topics, November 10, 2014