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How widespread is API connectivity in the LTL industry?

Recon’s Curtis Garrett shares thoughts on LTL’s tech evolution

APIs becoming the standard in LTL (Photo: Jim Allen/FreightWaves)

Application programming interfaces have become more commonplace in the less-than-truckload industry. It’s a significant change yielding big efficiencies for an industry evolving from an analog world.

An API allows two disparate systems to communicate with one another. It allows applications to transfer data and execute transactions in real time.

“Historically in LTL freight, base rates, carrier coverage points and other information was passed around manually using physical disks and CDs and had to be loaded, modeled and set up over and over again on each individual system,” Curtis Garrett, chief strategy officer at Recon Logistics, told FreightWaves.

“It was the true definition of information silos. Nothing was interconnected, and nobody benefited from the scalable attribute of passing information automatically,” continued Garrett, who has been working in LTL pricing and tech for 15 years.

The industry evolved to electronic data interchanges, which allowed for the transfer of load tenders, tracking updates and invoice details, between systems over time. While some information can be transferred back and forth through EDI, more complex functions like pricing and rating cannot.

“It wasn’t fast or flexible enough to handle rating — and so the norm was still for shippers and 3PLs to model and load LTL pricing in their system — to hopefully match what the carrier had in theirs, without too many errors,” Garrett said.

The move to API

A couple of companies began to build out API capabilities by the mid-2000s, and today initiatives keep expanding in-house at many carriers, 3PLs and visibility providers serving the industry.

Garrett said that even though EDI is still very commonly used today, the focus has shifted to more widespread API connectivity.   

“Even today, the industry is so extremely early in what will eventually all be handled via API connectivity but the fact that we have our bases covered with rating, tendering, tracking, documentation and now electronic bills of lading, we have a solid foundation to build on.”

Using APIs in the rating process is becoming the new standard, especially as the market moves to dynamic pricing. Also, the Digital LTL Council has been instrumental in pushing the industry away from manually generated bills of lading, which Garrett described as a “game changer for the industry.”

But some carriers are still unable to accurately model all of their accessorial charges and pricing components.

Garrett said Recon uses a “hybrid rating” approach in solving API rating holes on its TMS. “We’ll model certain accessorials internally with our rating engine — then pull the linehaul and fuel surcharges via API, then marry them up automatically to show our end user a complete rate. Shippers aren’t even aware we are having to do that.”

The future of APIs in the LTL space

On the horizon, Garrett expects the industry to API anything that’s being managed via emails, portals and customer service queues.

Rating APIs will soon let carriers know whether they are being pinged for analysis or for real shipment quotes and tracking APIs will evolve to provide more dynamic shipment detail around pickup and delivery. He also expects the claims process will soon be as simple as a shipper or 3PL submitting them from their own TMS.

“Hypothetically, any process or function that lives in a piece of software and results in information repeatedly being passed to another platform, with only the current shipment details being the changing variable, will eventually all be API driven,” Garrett said. “That way, people in our industry can be better used to make decisions, look at exceptions, apply logic to the gray — rather than function as information nodes that are sending and receiving bits and bytes.”

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.