Dynamic Routing 101

What Is a Dynamic Routing Guide and Why Do You Need One?

Some companies have learned hard lessons about routing guides over the past few years. A big one is that routing guides only work when the markets cooperate by keeping rates steady and a reasonable balance of capacity available. That’s been anything but the case, and as a result, very few routing guides have held up during this time.

As big technology advocates ourselves, it’s important to note that this is as true for companies operating a sophisticated TMS as those less tech-enabled and still using hard-copy routing guides and spreadsheets. Rates that aren’t honored, contract or not, and carriers with no trucks available are equally useless for companies in either position.

But, of course, having a capable TMS is very important to shippers of all sizes for many other reasons. It’s also a key component to fixing the problem and creating a truly dynamic routing guide as the solution.

But first, what is a Dynamic Routing Guide?

A dynamic routing guide is a tool that provides a set of instructions for shippers that provide direction on what carriers to use and when, that changes with the current market conditions. The dynamic part is how the routing guide enables shippers to overcome the short-term problem of limited truck availability while ensuring competitive rates as market rates move up or down. 

It’s worth noting that in the past, routing guides were primarily about saving money and built on static rates and backward-looking information. This mindset is why most are failing in the current market. An important point is that today routing guides need to be less about finding savings and more about guaranteed capacity and present (not historical) rates. 

Dynamic Routing Guides WithIn a TMS

As we mentioned, there is tremendous value in a TMS. Those benefits are extended with the integration of a dynamic routing guide. Connected via API, companies immediately access more flexible and guaranteed routing options but also gain advantages through better supply chain data leading to improved decision-making.

For example, an integrated technology allows companies to track routing guide performance and present carrier options based on their historical service performance. Loadsmart’s Dynamic Routing Guide uses past and present market data to make cost predictions based on reliability metrics like cancellation rates and adherence to appointment times.

An added benefit of flexible capacity is that having access to better spot rates puts pressure on contract carriers’ rates and decreases rejection rates while seamlessly integrating into workflows. Taken altogether, these things improve the performance of any routing guide. Having Loadsmart integrated with a TMS is a powerful tool that provides protection when markets move up or down. 

It’s important to note that a TMS alone does not protect against flow thru to spot rates that may allow loads to be tendered at costs that are too high with no oversight. Loadsmart’s API RateGuard enables controls to be set for this protection at an approved amount or at a set percentage above a benchmark or index. 

With the hope that the tough freight market is softening, it’s a necessary time to set up a dynamic routing guide that serves your needs whether rates are going up or down. Doing so will give you more leverage and guarantee capacity in any situation.

To learn how easy it is to integrate Loadsmart’s Dynamic Routing Guide into your TMS and load tendering workflows, visit www.loadsmart.com.