There’s no doubt the past couple of years have been a “shaking out” period for the transportation industry. And although business indices and industry forecasts of late are apt to contain phrases like “the recession seems to be slowing” or “results are showing signs of an increase”, industry experts and government officials often disagree on the state of our economy’s recovery, sometimes in the same industry presentation!
When was the last time you heard blanket industry concerns over tight capacity, driver shortages and the need for market pricing to regulate high demand? Industry concerns over low demand, excess supply and idle equipment are still problematic. And with oil prices inching steadily upwards, drivers will continue to have one eye on the road and the other on the fuel gauge.
Despite the continuing challenges many transportation firms have valiantly held on, making tough decisions, initiating cost-saving measures and squeezing efficiencies out of every turn of the wheel. Many of the firms who survived invested wisely in technology resources that enabled them to develop partnership arrangements with shippers to weather the economic downturn. These investments included user-friendly web interfaces for tracking and tracing shipments, web portals for electronic shipment status reports and, in some cases, direct links to shippers' computer systems to integrate order-entry and transportation information.
Unfortunately, not every transportation company has the resources to invest in sophisticated technology platforms. As a result, when the economy does rebound, many small to medium-size freight companies will still be competing heavily to develop a value-added service strategy.
Software as a Service (SaaS) may well provide the answer for many smaller firms looking for a cost-effective opportunity to compete in this arena. SaaS offers the potential for flexible, on-demand web-based computer applications, at lower cost than many in-house or off-the-shelf packages. Industry leaders like Descartes, Red Prairie, Sterling Commerce, Management Dynamics and Manhattan Associates are offering or exploring these on-demand solutions as various transportation/supply chain applications. Coupled with web-hosted supply chain management hub services that work with existing ERP systems like those offered by Supply Chain Connect based in Houston Texas, providing a platform to share order entry data with end-to-end inventory visibility, and you have a powerful new opportunity to partner with your customer in developing service solutions.
Transportation service providers have always maintained this business is about more than “just rates”. On the other hand, there are many shippers for whom transportation is just that, rates, and their continuous quest to drive freight costs to the lowest possible level. These firms treat transportation like a commodity, rather than a service. Undeniably, that's a strategy that works for some organizations; the challenge for transportation companies is finding shippers who value transportation as a service, as a means of connecting to their end-customer by leveraging transportation to their competitive advantage. SaaS may offer a cost-effective way for small to medium-size transportation companies to reinforce that position and develop new value-added relationships based on information sharing.