Transportation Tendering Through a Freight Exchange 

Purpose

Freight exchanges provide their members, who can be either shippers or forwarding agents, with the service of interactively bargaining on prices and transportation conditions. The shipper and the forwarding agent receive information on prices and conditions, and they can come to an agreement, just like in the real marketplace. As soon as the shipment is confirmed, the freight exchange issues an invoice to the shipper and pays the forwarding agent.

Transportation planners can use the freight exchange service in particular for smaller shipments in order to find a forwarding agent who can include the shipment in a load that is not fully used up (LTL) and therefore demand a more reasonable price. Shippers can work together in an SAP System and a freight exchange through the Internet. In this way, the transportation planner can use capacity to the fullest, thus lowering shipment costs. The transportation planner also always has an automatic update of the shipment status.

Prerequisites

You can make all the necessary settings in the Implementation Guide (IMG) under Logistics Execution ® Transportation ® Shipments ® Configuration of Transportation Processing for Forwarding Agents.

Process Flow

Transportation tendering through a freight exchange:

  1. The shipper transmits shipment information, such as attributes, conditions, and the maximum price for the shipment that the forwarding agent does not want to exceed, to the freight exchange.
  2. The freight exchange analyzes the data and compares it to the list of forwarding agents available through the freight exchange. Based upon the criteria specified by the shipper, the system creates a ranking list of forwarding agents that match the profile and have the required capacity. A confirmation with the data from the forwarding agent who meets the requirements of the shipper and is also most reasonably priced is transmitted to the shipper’s system. This confirmation contains the actual price that the forwarding agent requires for the shipment and data such as time of shipment transfer, order number, and the forwarding agent’s tracking number.
  3. When this information is received through the forwarding agent, the contract is completed. The shipper no longer needs to react to the offer since the forwarding agent selected by the freight exchange meets the previously-defined requirements of the shipper exactly.
  4. The shipment document is automatically updated with the forwarding agent’s data, the actual price, and the planned times.

The procedure is the same as the one described in Tendering Shipments for Service Agents. The freight exchange is simply treated as if it were a forwarding agent.