Freight Forwarding Software Gets a Boost From Custom AI Solutions

Freight forwarding is a crucial part of the global shipping industry, responsible for coordinating the movement of goods from one location to another. With the increasing digitization of logistics management, freight forwarding software has become an essential tool for businesses in this field. While these digital tools are already valuable assets to businesses in the field, incorporating custom artificial intelligence (AI) solutions can take them to the next level.

Imagine powering up your freight forwarding software with the following:

• automated load-to-carrier matching,
• real-time route optimization,
• predictive analytics that can help you automate business processes and make informed decisions about shipping times,
• dynamic pricing models that can automate your freight quoting process,
• NLP (natural language processing) to ease the pain of analyzing and processing freight documents.

These are just a few examples of cutting-edge machine-learning solutions that are revolutionizing the freight forwarding industry.

In this article, we’ll delve into the world of AI-powered freight management systems, exploring their key features and the benefits they can bring to your business. So, if you want to find out how your freight forwarding company can benefit from the power of AI, keep reading!

Freight Forwarding Business and Digital Transformation

The essential role of the freight forwarder is to streamline the journey of the transported shipment across the supply chain. Such companies aim to make it as safe, fast, and cheap as possible, planning routes, filling empty miles, and matching carriers and shippers with the most compatible expectations and needs.

In order to be capable of doing that, they have to stay in constant touch with carriers and shippers, ensuring the constant seamless flow of information and even distribution of shipments that will not disrupt the deadlines or cause blockages. And in the current business landscape, it is a hell of a challenge! With proceeding globalization and the increasing popularity of e-commerce, these tasks are becoming harder and harder to fulfill without access to digital tools. Fortunately, the technology is becoming more accessible than ever these days, and freight forwarders can reach out for its support for various purposes and in various forms, from SaaS platforms to custom solutions.

Crucial Operations Covered by Freight Forwarders

Freight forwarders can take advantage of modern technologies to streamline various tasks linked to shipment management. Let’s take a closer look at the most crucial of them to understand to which extent digital tools can be involved in their everyday activity. You may be surprised by how versatile it is!

Calculating Freight Costs

We are now entering the recession, and what follows, the rising costs are compromising the companies’ financial security. In such an economic landscape, it becomes even more significant to accurately predict the costs based on the changing variables and adjust the planning to these estimations. Here’s where artificial intelligence comes into play. Using predictive analytics algorithms, freight forwarders can calculate freight costs based on historical and real-time data on fuel prices or current traffic. The relationship between costs and various different factors, often independent of each other at first glance, can be unobvious, but a good machine learning, and more specifically, deep learning model can identify these patterns and allow the freight forwarders to use it in their favor.

Carrier Matching

Until recently, the carrier matching process was entirely manual and, thus, much more time-consuming. The freight broker acted as a bridge connecting shippers and carriers, communicating the offers and finding the best matches. The shippers would create bids to which the carriers could respond and pick the best offer among the proposed.

In theory, it sounds simple - and, in fact, it worked well in more stable economic conditions. But nowadays, when the prices and demand change so dynamically and the shipment movement is much more intense, it is no longer efficient. It forces shippers to constantly reevaluate their deals, and carriers - to consolidate shipments and sell empty spots instead of signing long-term contracts only.

Automated carrier matching is an answer to this issue. Instead of analyzing tons of requirements and crucial information manually, freight forwarders can pass this task to the algorithm, which verifies the bid automatically and looks through hundreds of offers available in the system to find the perfect matches. They can be linked automatically or validated by an authorized party. Based on the percentage of rejections and

Tracking Shipments

With increasingly complex supply chains, which involve more and more carriers passing the shipments in each other’s hands and consolidating them, the probability of losing a shipped item is much higher than it used to be.

A thorough tracking software can solve that issue, though. It requires the carrier’s transportation management systems and databases to cooperate, exchanging the provided information that reflects the current status of the shipment and its location. Now, with the use of advanced scanning devices that rely on computer vision and with the support of natural language processing, it has become easier than ever to keep the track of shipments. An extensive integration between systems is the key, though.

Paperwork and Regulations

Cooperating with carriers and shippers requires tons of paperwork - from contracts, through transport permissions, to consignment notes. Artificial intelligence opens the door to their digitalization, helping freight forwarders keep the track of their documentation. For example, natural language processing allows them to easily transform the papers into digital format and search for relevant information in the documents.

Blockchain (and its smart contracts) is another promising technology yet to change the face of freight forwarding with its revolutionizing potential. It makes agreements more secure, automatically validating whether their conditions are being met. Blockchain networks can also store the path of the shipment in an unmutable, decentralized form, confirming their origins and making them easier to track.

Freight Accounting

Accounting automation tools are an essential part of any digital system for freight forwarders, which issue and pass numerous invoices day by day. The agreements may have different conditions when it comes to billing - the freight costs may be paid in advance or upon arrival, and the shipping fees may differ depending on a particular case.

Using artificial intelligence tools, freight forwarders can bill automatically without worrying about errors. They also make it easier for them to detect customers that are not fulfilling the terms of the agreement and verify their credibility. Carrying out international transactions, they should validate the VAT number and other crucial data of the contractors and customers, and AI can do it for them!

Key Features of Freight Forwarding Software Solutions

Freight forwarding software solutions may differ in terms of their functionalities and modules depending on whether they are off-shelf, SaaS, or custom solutions and for which type of freight - land, sea, or air - they are destined. All its features can be improved with a little boost from artificial intelligence, what is proven by the examples below.

Carriers Management System

Freight forwarders cooperate with various carriers, which they need to coordinate and stay in constant touch with - and to be capable of doing that, they need an efficient management system and electronic data interchange. Artificial intelligence brings it to the next level, automating the assignments based on the availability of the carriers, their transport capabilities (depending, above all, on the vehicles they have at their disposal), and other critical information. Predictive models optimize the management, pointing out the most efficient distribution of the carriers at the moment in order to prevent downtimes.

Since it gathers data regarding the carriers and their assignments, the freight management system can serve for key KPI monitoring, measuring performance, and delivery speed. That also would not be possible without artificial intelligence algorithms, which process all this data in a way that enables visualization.

Track & Trace Module for Shipment Management

Supply chains are gaining complexity, and freight forwarders need digital support that grants visibility across them. With a track and trace module, they can follow the path of the shipments throughout the supply chain, locating it in real-time with the GPS systems in the vehicles and registering their trace digitally. This way, it is less likely that the item will get lost along the way, even if its transport involves various carriers and freight types. For the data flow to be seamless, carriers’ systems should be integrated with the transportation management software. This is why the majority of freight companies invest heavily in cloud computing.

Pricing Module

When it comes to pricing, artificial intelligence tools are already changing the face of the industry, helping freight forwarders adjust to the dynamically changing conditions of the market. Many companies are moving away from fixed prices and replacing them with a dynamic model. Whether they decide for such a move or not, freight forwarding companies need automated pricing modules in their software to be capable of updating the prices on digital freight marketplaces and use the available data to predict the prices based on different variables.

Document Management and Accounting

Artificial intelligence, including such technologies as natural language processing in computer vision, boosts back office processes by automating routine tasks such as invoicing and data verification for billing purposes, processing documents and transforming them into digital format, or controlling whether the transactions and deadlines are in line with the conditions of the contract.

Reports and Analytics Module

Another handy feature worth mentioning is report generation, which can be fully automated with artificial intelligence tools. AI models squeeze the essence of the sea of data freight forwarders are dealing with on a daily basis, replacing Excel files with full-fledged reports and providing them with clear, visualized insights.

Examples of Custom AI Solutions in Freight Forwarding Software

You may already have an idea of the areas that artificial intelligence can boost in the freight forwarding niche, but to dive even deeper into it, we have gathered specific examples of custom AI solutions, many of which we have introduced ourselves.

Automated Load-To-Carrier Matching

Manual matching is practically a thing of the past now that powerful algorithms can find a perfect match within seconds. All they need is the crucial load data (size, type, transport requirement) and carrier data (such as vehicle capability, availability for particular loading and unloading times, and, of course, their price range).

You could say that using load-to-carrier matching is like using a dating app instead of old school matchmaker service - it is faster, more accurate, and has unlimited possibilities. Such a system can issue recommendations based on which freight forwarders make their decisions or fully automate decision-making in order to speed up the whole process even more. Here you can read more about this process.

Shipments Consolidation

Due to the increasing fluctuations in demand, it is becoming much harder for logistics companies to avoid empty spots. On the other hand, the consumers shift their expectations regarding the delivery time, wanting it faster and faster - and the freight forwarders have to keep up with them to stay competitive. Consolidation solves these issues, enabling them to put the loads together and use their capability to the very last spot. Having such data as load size, type, destination, expected delivery time frames, etc. on disposal, the AI algorithm finds the best combinations of shipments that prevent the empty miles issue while keeping the roots as cost-efficient as possible.

Route Optimization

Which route will allow the carrier to arrive at the destination the fastest and at the lowest cost? In order to find the optimal solution, you need to take various factors into account, including the intensity of traffic in the particular area, the weather conditions, the specifics of the shipments, the availability of the drivers, and so on.

Predictive model can do it for you, analyzing thousands of combinations to find and the most efficient one at the moment. In order to make that happen, you will need integration with real-time data sources on such factors as, for example, fuel costs. Here we described how an efficient fleet fuel management system can cut fuel costs with a refueling strategy.

Predictive Analytics for Shipping Times

One of the crucial aspects for the modern customer is the capability of knowing when their delivery will arrive. Every company that wants to prove its reliability, so important in the saturated market, should, above all, ensure the maximum accuracy of the shipping time estimations.

How to achieve it? With a custom predictive model, they can calculate delivery time in a way that reflects their processes and business operations, using all the relevant data available such as usual traffic intensity on a particular route, the complexity of the supply chain, and the types of freight involved. Through the integration with the warehouse management system, these insights can also serve the shipping hubs for optimizing their inventory management to prevent congestions.

How to build an effective prediction system that will grant you a competitive edge? In our portfolio, you will find a complex project that involves predictive analytics for logistics. If you would like to follow the process of its development from scratch, check our case study.

Related case study: Implementing AI model to optimize routes and timelines of deliveriesA company from the logistics sector approached us to create a custom AI model that optimizes routes and the scheduling of deliveries.Our challenge? The key challenge here was to prepare a dedicated AI-based system designed for carriers to optimize delivery time depending on the destination address. Thanks to the model we managed to reduce failed and late delivery rates by 30%. Read our detailed case study of this project.

Predictive Maintenance for Transportation Equipment

Anytime the transportation equipment fails, freight forwarding companies are exposed to massive financial loss, particularly when sea or air transport is involved. In order to avoid that, they can engage predictive maintenance modules in their software, scheduling the maintenance service before the end of the equipment’s life and detecting issues before they close major downtimes.

Lane Analytics and Demand Forecasting

Shipment consolidation is one of the ways in which freight forwarding companies can handle the fluctuating demand, but there is another artificial intelligence tool that allows them to prepare for it in advance. Demand forecasting takes advantage of historical data, finding patterns that repeat in time and could indicate the way demand shapes itself and the future.

Similarly, predictive analytics can also serve for identifying the most efficient lanes based on the existing insights from the previous routes. Of course, there are events that are impossible to predict (take the blockade of the Suez Canal in 2021), but artificial intelligence makes it easier to stay prepared for them.

Automating Quoting and Pricing Optimization With Dynamic Pricing Models

AI helps freight forwarders automate quoting - instead of updating quotes manually, they may rely on algorithms to estimate and update them. Various variables impact the dynamically calculated price, but some crucial parameters include the origin and destination of the shipment, required time windows for loading and unloading, and types of equipment being used.

Dynamic pricing model takes them into account while relying on such external factors as weather conditions or fuel prices. In our article, you can read more about the way freight forwarders use dynamic pricing and the benefits of it.

The Benefits of Custom AI Solutions in Freight Management Software

Based on the examples listed above, you can see that artificial intelligence has immense potential in logistics. Although even the best freight forwarding software cannot replace freight brokers, It can take over the most mundane, repetitive, or time-consuming tasks, releasing new resources.

Some of the key benefits of AI applications in logistics software include the following:

• increased efficiency and automation of processes and critical tasks
• improved accuracy and prediction of shipping times and costs
• enhanced tracking and monitoring of shipments
• improved profit margins with dynamic pricing

How to Move Ahead of the Competition With a Custom Freight Forwarding System?

In our experience, logistics companies often waste their budget because they rely only on SaaS solutions that do not necessarily reflect their business processes. Their size, the types of freight they manage, the area they operate on - all these aspects impact their requirements which the simple logistics software often cannot handle.

That’s why custom is the way to go - our customers agree! Choosing a reliable custom software development company is the key, but there are some things you can do to ensure your project’s success. Above all, it is worth thinking about improving your data flow by rethinking your data infrastructure and obtaining quality datasets that will train your AI models, guaranteeing maximum accuracy. We can help you with that! Hit us up to discuss your idea.