Less-than-truckload (LTL) shippers are under pressure to digitize bill of lading, industry-wide. Digitizing shipping documents like this would help carriers to reduce costs, especially LTL carriers. Simultaneously, it would optimize freight flow and return some of the profits to the shippers.
Today, the drive to automate freight shipping has focused heavily on the single bill of lading. This piece of paper accompanies every shipment, and there was a drive currently to digitize it. The reason for this push is the fact that shippers need to be able to manage the flow of electronic data that crosses through their offices, through their docks, and to the motor carriers. There is a serious issue among industry personnel who still receive handwritten bills of lading. The problem with handwritten content is that the freight classification might not be included, there could be errors, or they’re simply not legible. In theory, the more the industry can get away from such errors and issues, the fewer problems they will have in the system.
Current Errors in the Industry
Data from these bills are typically sent to the carrier with a fax machine, and then they have to be painstakingly entered into the freight management system by hand. When this takes place, it paves the way for transcription errors. Unfortunately, that’s not the biggest problem caused by the use of paper bills. One senior director for a Chicago-based technology company stated that the problem is not the paper but rather the pain. Two minutes prior to leaving, something can be written down on that paper, which dramatically impacts these cost. Changing the classification or the weight can cause serious financial discrepancies down the line. Whether this is the results of simple human error or nefarious actions, digitizing bills will get away from the need to write anything down.
Digital Bills for Data Analysis
The integration of new technology and the digitizing of these bills have the potential to eliminate manual errors, which is a huge benefit in and of itself. However, the benefits extend far beyond this. Right now, there is a cost to the LTL carrier, who has to verify the weight, classification and other data. There is a cost to the shipper if the freight has to be reclassified. Finally, there is a cost to everyone if there’s a legal dispute or a legal claim. Digitizing this information means that data can be used in other systems and all of these extra costs can be eliminated eventually.
When data is received electronically, it can be used in real-time capacity planning. That information can be used to expedite invoicing and payment processing for truck drivers and carriers. Eventually, this will provide the ability to fine-tune operations. Geoffrey Muessig, executive vice president, and chief marketing officer at PITT OHIO, stated, “If we can get information electronically and get it earlier in the day, we can build a roadmap for where we need drivers that night based on freight flows. Those are the biggest payoffs: reduced empty miles in our linehaul operation, getting freight on the street earlier in the day and delivering it earlier the next day.”
Shippers win through improved service and, in some cases, extended pickup times. This means improved operational efficiency across the board, leading to reduced operating costs for everyone. In the long term, this type of transition could save shippers money and lots of it. Muessig went on to state, “We’re prepared to again share some of the savings back with our customers — those who are prepared to step up and make this change.”
Saving Money in the Long Term
This type of change is not one that should happen in the form of a single, massive overhaul. A change like this is expensive, such as the costs associated with training. So, what is the alternative? Changing things a little bit at a time will make them seem less frightening, less overwhelming and will be a lot easier for businesses to make the switch industry-wide through case-by-case implementation. One company is doing that today. They are increasing the number of electronically received documents by approximately 15 percent on a regular basis. About 10 years ago, the number of invoices received electronically might have been only 5 percent. Today, it is upward of 85 percent or more. With this number already so high, it only makes sense to move the rest of the bills to an electronic format so that invoicing results can be improved. Businesses are slowly but surely trying to double the number of electronically received documents every six months. By making a slow and steady change in this area, everyone can help everyone else.
This type of change isn’t easy, however. This particular document is more than just a receipt for the goods or a list. Bills of lading are legally binding contracts between carriers and shippers. It is a contract that can be upheld in court. It is a document of title to whatever goods are being shipped, something that has been used throughout the history of the shipping industry. This particular document can be traced back to The Motor Carrier Act of 1935, which brought about new economic regulation for trucking services. These changes were implemented to replace the Interstate Commerce Commission, which was finally dissolved in 1996, and had the same requirements as before and the same liability for damage and loss as were imposed on railroads at the beginning of the 19th century.
Shared Responsibility and Blame
The issue now is that carriers and shippers are both to blame for the problems that arise. Most of the time, the trucking company issues a blank document to the shipper. LTL carriers have been hesitant to make a stand and require electronic data, especially for smaller shipping customers who don’t have transportation management systems. However, smaller companies don’t necessarily need to use this type of system to make the transition. They can use standalone software integrated into the existing financial systems they use. The real issue is not changing the rules or fixing the software but changing human behavior.
Sam Ralat, senior director of carrier innovation at project44, stated, “There’s large muscle memory around this problem. Something about the format of that piece of paper — people think it’s magic. But, that piece of paper is not doing you any good, and it’s enabling bad behavior. We need to go to a more parcel-like experience where you’re using something like a barcode, where it’s more like an airline registration experience.”