The burgeoning freight bill payment industry has evolved over the years from the green eyeshade-wearing legal eagles who reviewed your grandfather’s freight bills to the big data-driven analytical firms of today that offer everything from “soup to nuts” on the bill-paying menu.
Indeed, over the years the industry has gravitated from mom-and-pop operators to gigantic multinational banks and financial service companies. While there are still scores of solid, family-run freight bill payment service companies, they’re being squeezed by the big boys. Gone are the days, as one industry insider put it, “of doing deals with your brother-in-law.”
Today, shippers have a menu of services from which to choose. There are single-source options for both carriers and shippers offering the latest, data-driven solutions. However, experts say that the real savings occur not from spotting the occasional error in a freight bill, but rather from leveraging time-sensitive data—from which carrier to choose to geographic lane and other customer-centric tools for streamlining freight moves.
Nearly every freight bill company can process invoices accurately and efficiently, but experts and industry officials contend that even more streamlining comes from examining how to enhance working capital while providing carriers timely, predictable payments. A good freight bill payment analysis can help shippers improve decision making with tools and services that can turn raw data into valuable insights about their shipments.
Market players also contend that the key for shippers is helping them find new efficiencies at every mile of their supply chains while using collaborative, web-based tools to reduce errors and resolve exceptions quickly.
“The state of the market is optimistic heading into 2021,” says Jeff Pape, senior vice president of product and marketing at U.S. Bank Freight Payment, which processes more than $24.5 billion in freight payments annually for corporate and federal government clients. “And while the market is good, it has a lot of challenges. The pandemic has certainly tightened capacity and rates are going up.”
By the end of last year, most freight payment indexes were showing total shipments and spending increasing commensurately. “With improvements in the economy, this freight market will rebound and be strong,” adds Pape.
However, others in the industry describe a “code red” situation due to the rapidly changing boom-and-bust business cycles brought on by the pandemic. It’s no longer survival of the fittest, they say. It’s merely survival.
So, let’s take a deeper dive into the state of the freight bill payment services market. We’ll examine how the industry reacted to the pandemic as shippers learned to work remotely and safely, and we’ll identify some best practices in freight payment as we roll into 2021.
The COVID effect
Like most businesses in general, and freight transport specifically, the worldwide coronavirus pandemic sent practitioners scrambling to keep supply chains moving and their workers and customers safe—all while simply trying to stay in business.
“COVID-19 has made an impact on all businesses, but especially suppliers,” says Daniel Brachfeld, vice president and general manager of supply chain solutions at American Express, a considerable player in the freight bill payment sector.
According to Brachfeld, over the past six months, Amex heard from many buyers, including shipping and freight companies, who were seeking ways to support current vendors, find new ones, and keep their business on track. “All of these challenges are placing pressure on suppliers’ cash flow and liquidity, creating an even greater need for early payment from the large freight companies they do business with,” he says.