Drive costs lower by building and utilizing a routing guide

( Photo: Jim Allen/FreightWaves )

(Photo: Jim Allen/FreightWaves)

It is said that moving freight is all about relationships. If that is true, what value does a routing guide provide? A great deal, it turns out.

Routing guides are essential documents that provide a list of carriers approved to move loads. A routing guide is more than just a list of carriers, though, it is a living document that provides power and visibility into the shipping process. Through the effective use of a routing guide, shippers can easily and quickly identify the best carrier partner for their shipment; one that meets the load’s physical and financial requirements and provides the best price.

So what is a routing guide? A routing guide is a document that outlines characteristics for carriers authorized to move shipments. Shippers match a shipment to a carrier quickly by going through the guide. The guide should include rate information, lanes the carrier typically runs, services the carrier can provide, shipment volume and weight requirements for the carrier, origination of loads, and any number of custom variables that may be pertinent to a shipper’s operation.

Guides can also include challenges or issues vendors have had with carriers. Does the carrier offer the lowest rates but is always late making the delivery? That is important information for time-sensitive loads. Is the carrier’s equipment capable of only handling loads under 12,000 pounds? That is also important and should be noted in the guide.

Routing guides also provide another important function by offering the ability manage the load assignment process. It gives the controller insight into load breakout, for instance splitting a load among two carriers to ensure the shipments are covered and acceptance rates are maintained.

Some companies still provide paper versions of their routing guide, but most are now incorporated online in some manner. Excel spreadsheets are a popular method, but many companies such as nVision Global now provide the routing guide as part of the functionality of transportation management systems. In nVision Global’s case, the routing guide can be accessed through its IMPACT TMS.

In essence, the guide ensures the proper transportation provider is used for a particular shipment.

The routing guide should include carriers a shipper wants to work with, but also those that may be able to fill capacity gaps (routing guides can cover additional modes of transport as well if that fits your operation). The guide will be given to operations personnel to schedule shipments, or to suppliers in the case of inbound shipments.

Carriers included in the guide will be rated based on preference. That preference may be lowest rate, but if there are other considerations such as on-time performance or service requirements, carriers may be ranked differently. When a shipment is scheduled, the user simply inputs the parameters of the load including rate, origin/destination, weight and service performance, etc. In an automated system, carriers that match the requirements are identified and ranked by priority. This process can also be done manually but is more time-consuming. The shipper then simply contacts the first carrier on the list to secure the load and moves down the list until the shipment is scheduled. This process can also be automated through some transportation management systems (TMS).

Routing guides are essential documents for shippers that, if used correctly, lead to lower costs and consistent capacity. The time savings alone from not having to make multiple calls to secure capacity is one part of a routing guide’s benefits. Another is creating that relationship with carriers who may provide better rates in the future for consistent business.

 

Best practices for using routing guides

To successfully achieve these benefits, though, a regular audit of the routing guide is necessary. Carrier rates and other variables constantly change and the routing guide needs to reflect this. If using an outside provider for transportation services, audits of goods moved can be a regular reporting feature of that service. This will identify situations where shipments did not follow the prescribed routing guide. Perhaps there was a valid reason, but with hundreds or even thousands of shipments some months, larger providers can lose sight of unnecessary exceptions that can potentially cost them millions of dollars annually.

Audits also allow for the comparison of transportation providers across a series of metrics. Shippers’ use of the routing guide should also be audited to ensure they are following proper protocol. If problems are seen, consider implementing new policies and/or penalties for non-compliance.

Ensure all the necessary details are not only included in the guide, but also available as inputs for those using the guide. Not including a key attribute could render the guide useless or lead to a shipper paying higher rates. When ranking carriers, the information must consider both price and service capabilities. This information is also helpful when comparing carriers. When looking at carrier rates, compare them to average lane rates and network-wide rates to ensure they are reasonable for that lane and load and consider including additional charges, such as accessorials and fuel surcharges. These last items can have a significant impact on the overall rate and turn the cheaper carrier into a more expensive one in the end.