The Real Cost of Manual Rate Management for Logistics Businesses

September 14, 2021

The way freight forwarding companies work is not easy. They must face high price volatility from shipping and transport companies, and at the same time, they must be able to quickly offer quotes to their clients based on such unstable information. Usually, this process includes many phone calls, emails, transfer of data from some media and formats to others, and, above all, lack of internal consistency and coherence in all that information generated daily. 

These tasks take a long time to complete and multiply the possibility of human errors that can be burdensome for the company. 

The human inaccuracy must also be factored into the equation as an indirect cost. According to a survey by global analyst firm IDC, human error costs firms in the United States and the United Kingdom an average of $435 per employee every year, or $18 billion per country.

Manual rate management is a time-consuming business process that requires valuable employee time that could otherwise be spent on more urgent or attractive tasks.

Automation improves time efficiency and reduces costs

The time your employees spend manually managing rates for your customers is the most evident cost of manual data entry. Every minute of that time is deducted from your pay. It is time wasted on administrative work that could be automated, freeing up your employees to work on high-value customer-facing tasks in other parts of the organization.

Alternatively, removing the stress of manual rate management from the to-do list may allow the company to achieve the same productivity levels with a smaller workforce. In either case, manual data input has a direct financial impact because it requires more time from your employees to complete. And time management is even more complicated when there are spikes in the workload, leading to increased stress levels for employees and increased potential for human error.

Suppose each employee must manually manage the information with which they work. In that case, it is almost impossible to implement a standardized system since they will have entirely personalized the way they handle all that information. Some prefer to use spreadsheets, while others may take notes in text documents or save and share data in PDF format. This has some relevant implications for companies:


  • There is no registry of past activities or, at best, only a highly fragmented one
  • There is no way to detect errors before sending rates to clients
  • Inconsistency and fragmentation of data makes it impossible to automate processes 
  • Employees are tied to manual data entry and management tasks, which undermines their motivation and prevents them from carrying out more satisfactory tasks of greater value to the company

Recently, Devicemagic did a survey including 1000 SMBs, trying to understand what their top 5 business priorities are?

The results are shown in the graph below.

This graph shows the top 5 business priorities of Small & Medium Sized Businesses. This data as been collected after  taking survey of 1000 businesses.
Top 5 Business Priorities of SMBs

Computer-aided solutions, including electronic data entry, dramatically improve the flow and management of information, regardless of your industry or application. It's easy to see that any system that gets data into your organization's hands faster will result in time savings, improved employee productivity, and lower costs.


The importance of data standardization

Due to the inefficient handling of data, implementing a comprehensive software solution becomes more and more necessary for freight forwarders.

However, suppose a company wants to use an API to get quotes from a shipping provider automatically. In that case, it must be able to send and receive data from that platform, which implies data standards. Manual quote management makes that process impossible—possibly the most critical consequence of manual rate management for freight forwarders.


Most customers and shippers today anticipate real-time tracking and traceability as part of the package delivery process. Using data interoperability mechanisms such as APIs or geofencing, the technology allows crucial shipment data, such as tracking and proof of delivery, to be transmitted to the customer in real-time, providing customers with real-time location and delivery status virtually quickly.

Calls to dispatchers and drivers to track packages are now a thing of the past. Visibility is a game-changer for freight forwarders and the logistics industry in general, and data standardization is instrumental in achieving it.


One of the most significant risks freight forwarders faces in a market with prices as volatile as the transport industry is rate turnaround, further slowing down the quotation process. This risk increases when the activity is managed manually due to the slowness of the process since prices can vary in extremely short periods. An automated rate management software completely avoids this problem since the procurement of prices is done in real-time, so it is updated to the latest information at all times. 

The path to sustainability

The change to automated rate management services like Freightify also implies greater sustainability since paper and physical storage spaces are reduced. Even though the use of cloud-based services, the need for local digital data storage can be reduced. These changes result in greater energy efficiency and cost reduction for the company.

The use of cloud-based services, for example, must take into account the carbon emissions it entails and how to reduce them. Improving the rate of use of servers, or choosing non-polluting energy and more energy-efficient options in infrastructure, for example, can make a significant contribution. There are cloud providers that enhance precisely these factors so that all types of companies can reduce their emissions.

In fact, according to an Accenture study, migration to the cloud can lead to up to a 65% reduction in energy consumption and 84% in carbon emissions. And with sustainable applications, this reduction can reach up to 98%. Parallel studies commissioned by Amazon or Google reach similar conclusions.


Conclusion

"Things have always been done this way" is never a good argument, and in today's fast-paced world of logistics, much less.

Companies must be aware that it is no longer possible to offer the services that their customers expect from them without adopting the solutions that technology makes available to them. By working with a tool like Freightify, companies can take the first step into controlling their future. Start your digitalization journey with us by scheduling a personalized demo with our logisitics professionals.