Has Your Waterfall Run Dry?
Freight Broker, outsourced logistics
The Wonders of Modern Technology
If you’re like most logistics managers, you were pretty happy when modern technology made waterfall tendering possible. No, it’s not rocket science, but it was a huge help to shippers, brokers, and carriers.
Waterfall tendering is pretty easy to set up. If you have any type of repetition in your freight lanes, you begin to build up a list of “regulars” who are typically interested in your loads. You know how it works:
- You notify the list of regulars when a certain shipment comes up.
- You rank the order in which you are going to notify these folks based on price and service. For example, if your first choice isn’t available, you go to number 2 and so on.
Technology simplified this process by automating it. That means you didn’t have to spend all your time any more going down the list. Automated waterfall tendering saved you time and money. Everyone loves it–but what if the waterfall runs dry?
The Digital Broker and the Broken Promise
The last couple of years have been dominated by stories of digital brokers disrupting traditional brokers by taking over a manufacturer’s freight and adding a waterfall tender process. It sounds like a pretty good deal for the digital broker and the manufacturer, but not so much for traditional brokers. (These stories about the downfall of the traditional broker are as old as the profession . . .)
Here’s what happened to a manufacturer I know. A digital broker (we’re going to call them Big Digital) sold this manufacturer on a comprehensive logistics plan that came with a kick-ass waterfall tender process. This was going to save our manufacturer lots of time and lots of money. But Big Digital didn’t have a plan for a longer-than-usual waterfall. You see, Big Digital didn’t know that some of their providers were listing rates 10X what the normal rate should have been.
Well, you can imagine what eventually happened. The freight ran through the waterfall and as providers declined, the freight was picked up at 10X the first provider’s rate. And Big Digital whose business model depended heavily on technology to sustain their low, low prices, had removed all the folks who might just catch these anomalies. We’re talking about real, live people.
No one caught it. And Big Digital ended up with one very unhappy customer. You see, not only did Big Digital not make good on their promise to save the manufacturer time and money, but rather they substantially increased the cost of doing business.
The Moral of this Story is . . .
“How would AM Transport handle this situation differently?” That’s what a friend asked when I recently told her this story.
It’s pretty simple.
Our team members are in our waterfall. Yes, we understand that your freight must be moved as quickly and safely as possible and we work hard to make this happen. But we’re not just a tech company. Our team is made up of career logistics professionals who don’t struggle making do in the gray areas of life and business.
The above scenario could not happen on AMT’s watch because after those first few carriers declined, our team would have reached out. We have long-term relationships with the carriers we work with, and that means we’re always ready to negotiate, to offer flexibility. And we always want the best carrier on every load you entrust with us. We’re problem solvers–that load never would have made it to the bottom of the waterfall.
You see here at AM Transport, we know something lots of digital brokers don’t know. People, not technology, are the secret to an efficient supply chain.