Despite hype, few truckers offer dynamic routing

By Ira Breskin -- Logistics Management, 8/1/2005

Dynamic rerouting of less-than-truckload (LTL) shipments has become a premium service that many carriers talk about, but few offer. That's because modest demand for the service makes it economically unfeasible for most motor carriers to do so.

Dynamic routing uses a carrier's freight tracking system to determine the exact location of a shipment in transit and suggest or arrange an alternative routing. Although highly automated, Web-enabled dynamic routing programs are available, carriers have been slow to offer the service because many are reluctant to charge shippers the premiums necessary to recoup their development costs. Few LTL shipments, moreover, are suitable for the premium service. The ideal candidate, carriers say, is a deferred shipment that a shipper or consignee quickly and unexpectedly needs to divert to an alternative destination.

ABF Freight System of Fort Smith, Ark., offers the most highly publicized and automated dynamic routing service. Yet it typically handles fewer than 3,000 such shipments per year, says Michael Newcity, director of systems and emerging technology. Demand for the service has been consistent over the past several years, he adds.

Shippers that utilize the service like the ability to quickly change a shipment's destination. Teragren, a Bainbridge Island, Wash.-based seller of bamboo flooring and panels, occasionally uses the service when shipments misrouted by the customer are urgently needed at another job site. Karen Beseda, Teragren's logistics manager, says she especially appreciates the ease and speed of handling routing changes over the Internet.

For the most part, shippers don't balk at ABF's additional service charge, which starts at about $45.00 per shipment. "It depends on the situation, the value proposition. For some shipments, it makes sense to go to the 'wrong' destination," Newcity says.

Another carrier offering dynamic routing, Yellow Transportation, imposes an additional charge only if the shipment requires a higher-level, expedited service or a switch to another mode of transportation, says President and Chief Executive Officer James Welch. Yellow Transportation's hybrid rerouting system relies on telephone, fax, and satellite systems to receive the rerouting request and communicate changes.

After fielding a customer's request (often sent via the Internet), Yellow uses its Exact Express software to track a shipment and determine the most viable alternate routing, Welch says. Typically, a customer service agent will then contact the shipper or consignee to determine the most appropriate shipping alternative.

ABF, on the other hand, handles most requests and communication over the Internet to reduce its dynamic routing costs. However, ABF personnel check each request to ensure that the party making the request has authority to change the routing. The company then issues a corrected bill of lading.

ABF uses its proprietary Status Calculator to locate the wayward shipment for intervention at the next feasible location. That's usually a truck terminal but could require intercepting a trailer while en route.

Other motor carriers are likely to follow ABF's and Yellow's lead and introduce dynamic rerouting services. In the fiercely competitive trucking industry, major carriers often feel pressured to match any rival's technological advantage. Whether enough shippers want to utilize these services remains to be seen.