TruckingVisibility Tech

Automating rate contract management illuminates pathway to profitability

Industry insights from EBE Technologies

By Larry Kerr, president of EBE Technologies

Receiving rate contracts has not changed much over the years. They arrive through EDI, email, load boards and even fax. Ideally, all rate contracts would be EDI based. EDI — electronic data interchange — provides centralized visibility and allows triggers to be set to always accept specific offers based on lane, shipper and commodity codes. In addition, changes in pickup or delivery times and other load-related data are automatically made available for review.

Unfortunately, EDI is not always provided by the shipper. Even many of the Top 100 carriers receive emailed and faxed rate contracts from smaller shippers and brokers. In some cases, EDI files have embedded rate contract documents carriers extract to use as an image-based document required during the billing process, which effectively defeats the purpose of the EDI process. 

The main issues with the manually processed rate contracts are the lack of management and reporting. Often, these contracts are sent to an individual customer service representative or a distribution list. These processes lack visibility as to how many contracts were received, accepted or denied. 

Further, these contracts are often printed for sharing between the customer service representative and dispatching teams, have terms and condition stamps added to the image and then are scanned and emailed back to the shipper. To add further complexity to the process, should there be a change in the shipment, the process is repeated, providing additional opportunities for a service failure and a truck being at the wrong place at the wrong time, not to mention an upset shipper and driver. 

Consider the adage: “Without a process, a transaction cannot be managed.” This rings true for so many carriers. Management hopes team members do their jobs correctly, but a lack of visibility to the number of rate contacts received and processed could be the reason why contacts may have been turned down. 

In some industry segments, accessorial charges may accrue if a trailer or container are not moved by a given time frame. Not only does this cause a customer service failure, but the added expense may cause the move to be performed at a loss. 

Given the challenges associated with the manual processing of rate contracts, systems have been developed to create processes that allow management to measure and manage the contracts in a digital workflow-based solution. 

An automated solution will allow shippers to send rate contracts to a single email or fax address. If the shipper is a repeat trading partner, information from the email or fax number can be used to identify the shipper and place the contract into a workflow based on routing rules. 

Once in the workflow, a determination is made if the contract should be accepted or rejected and a reason for the rejection. Rejection data is made available to management for strategic planning purposes. 

Accepted loads advance in the workflow, where additional processes occur such as data entry into the TMS system and electronic stamp of terms and conditions can be applied and the contract is sent back to the shipper. 

As a rate contract is indexed, a lookup is performed to determine if the contract is in the workflow. If it is, the contract is placed in a workflow queue for a change audit review. During this review, a team member will review the two contracts to determine if there are differences between the status data.

If changes are detected, a determination is made to ensure the carrier can meet the delivery window as outlined in the new contract. 

These automated rate contract workflows measure the contract at each stage. These measurements include how long a contract was in the review process, the turndown reason, number of revised contracts and individual productivity reporting. 

Shippers will never lose a document, driver or client through an automated rate contract management system. These systems provide insight to greater profitability and open more opportunities by having the correct equipment to cover more moves.

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