New Descartes report makes the case for the benefits of increased transportation IT spend

A new survey recently issued by Waterloo, Ontario-based Descartes, a provider of logistics based on-demand, software-as-a-service offering examined the intersection of how top financial performing companies are more than twice as likely to have the largest percentage increase in transportation management IT investments when compared to companies with smaller bottom lines.

Entitled the “7^th Annual Transportation Management Benchmark Survey,” was based on feedback from 345 global transportation professionals to identify the strategies, tactics and technology-thinking of top-performing organizations. Descartes said freight brokers are the largest represented business type in the survey, at 24%, with nearly two-thirds of respondents, at 66%, working in the logistics community, and manufacturers, at 14%, leading the shipper group.  And geographically, 71.1% of respondents said that they have a North American presence for operations, with Western Europe next at 39.6%.

In terms of IT investment, the survey found that the top financial companies, which made up 41% of respondents, are more likely to have no obstacles to securing transportation management IT investment compared to companies not performing as well financially, at 26%. Respondents spending $100 million or more on transportation in 2023 came in at 12.4%, in line with 2022, at 12.6%.

As for the strategic importance of transportation management as viewed by companies’ management, 30% said it is viewed as a competitive weapon, hitting a new all-time high, with 43% saying it is a customer service differentiator. On the other end, 21% of management view it as a basic service, with 6% calling it a necessary evil.

For transportation management capabilities, visibility (tracking/proof of delivery), led the way, at 60%, snapping three years of declines, and carrier sourcing, at 46%, and performance management/BI dashboards, was next, at 45%. Other capabilities cited included: order management (42%); execution/carrier communications (42%); procurement/contract management (39%); and rating/optimized planning (37%).

In an interview, Chris Jones, Descartes EVP of industry, said that at a time when demand for freight services, as well as rates, are down, that the concern for something like transportation capacity would not represent a major concern for the survey’s respondents. But in looking at the findings for industry or regulatory change over the next five years, he noted that the driver shortage led the way, at 42%, despite falling 8% annually, with carrier capacity and fuel costs next, each at 40%.

With 30% of survey respondents, viewing transportation management as a competitive weapon, Jones said that over the past few years, transportation has received more attention from the C-suite, whereas it was something that was previously not as highly prioritized or ignored altogether.

“It is growing but certainly has a long way to go,” he said. “There is another perspective logistics professionals need to think about here. Most C-suites think of logistics and transportation as a ‘get it done’ type of organization. But when looking at how transportation value is measured, we asked respondents different things like cost-per-shipment, service level targets, contribution to revenue growth, and contribution to competitive differentiation, and have them check all that apply. Part of the problem, though, in terms of ‘executive awareness,’ is that we [as an industry] don’t always do a good job at measuring the value. CEO’s care about revenue growth, competitive differentiation kind of stuff…but you don’t get credit for cost-per-shipment or service level.

A section of the survey focused on sharing information beyond transportation operations found that sharing information within the transportation department led the way, at 59%, for the first time in six years, with customer service next, at 55%. Sales and customer service, at 51% and 48%, respectively, rounded out the top four.

Jones explained that there are many companies today with a lot of transportation data that do not use it within their own organizations, including their own transportation groups.

“Transportation generates so much data, and it can tell you many things,” he said. “Beyond transportation, it can tell you about customer behavior and a lot of this information is really valuable, well beyond transportation organization, like about customer behavior, for example,” he said. “There is all this data and companies need to think about how they are using it. So, getting that data and then getting it integrated into other parts of the business—goes back to the whole notion of measuring. The more places you use transportation information, the more value you get from the solutions that generate it. The easiest one to think about is sales or customer service. Customers want to know where their goods are and that is why visibility has taken off so much. They want to know where their shipments are. So, you go to customer service or sales or have it [the data] in a self-service portal. You tend to see that for those who think it is more important—or the better financial performers—that they do more of it across the board.”

For the companies focused on and committed to upping their transportation management IT spend, Jones noted that it is akin to a self-fulfilling prophecy, in that the companies that are more aggressive with their strategies and their spending are the one that get better results.

“It's a virtuous cycle,” he said. “You can turn right around and do the same thing again, and that's this whole point about the management part of it is that management recognizes it can really use this to make a difference to the business, not just a difference to the transportation organization.”