The terms rate management system or freight rate management system describe a class of IT systems or software that helps companies in the logistics industry to better oversee and control the purchase of their freight rates. Logistics service providers or freight forwarders use the applications to store their purchase rates with carriers and airlines and to make them available to their organizations and their own IT systems. But even more interesting: Freight rate management systems also help shippers and importers to manage their freight conditions from logistics service providers.
Rate management systems for air freight, sea freight, rail freight and land transport
In the freight market, the freight rates to be managed depend on the individual modes of transport. While the air freight sector is exclusively concerned with general cargo prices, in sea freight a distinction is made between general cargo prices (less-than-container-load or LCL) and container prices (full-container-load or FCL). The same applies to rail freight. In the land transport sector, a distinction is made between general cargo (partial loads) and full loads, i.e. entire truck loads.
Daily rates also apply as spot or ad hoc freight offers
If freight costs or shipment costs are purchased from freight forwarders on a daily basis, these are referred to as ad hoc prices. These are always absolute prices for a very specific shipment. These shipment prices can differ significantly from the freight costs from long-term framework agreements, for example because there is available freight capacity on ships or in aircraft that needs to be filled. The freight forwarders then offer correspondingly lower prices for this. Even if companies use freight tariffs for their regular transport volumes, it is sensible for them to occasionally make daily price inquiries to their freight forwarders. This helps you save on freight costs.
Freight rates are referred to as general offers or quotations
Many shippers who regularly send freight conclude contracts or framework agreements with their freight forwarding partners for a certain period of time. The duration varies from one month, to quarter, half year, year, or even several years. Multi-year framework agreements in particular are often the result of a freight tender. At lower frequencies, freight tenders are sometimes referred to, but more often they are referred to as rate updates.
To put it simply, freight rates are prices per kilogram or container for various services or offer items. The absolute shipping costs can then be calculated from these values. The shipper or freight payer is then billed for these by the freight forwarder.
Freight purchasing and procurement with rate management systems
The use of manually maintained Excel lists is no longer up to date. They make it difficult to standardize different calculation bases and convert amounts in foreign currencies only with difficulty. In addition, Excel templates are time-consuming to maintain. Shippers and importers of all sizes are therefore starting to look for technical support in obtaining, comparing and managing their freight rates with freight rate management systems. When selecting an eProcurement system or a rate management system, however, companies must ensure that it covers both the area of freight rates and freight offers as well as the area of spot and daily price inquiries.
Standard web applications as freight rate management system of great benefit to shippers
In addition to classic tendering tools or rate management systems, web applications, so-called cloud solutions, are a very good alternative for the freight sector. These make it easy to carry out tenders. Shippers and importers can use these as a freight rate management system and also carry out normal rate updates and offer updates. The effort involved is minimal, regardless of whether the update is annual, quarterly or monthly. Data entered once does not have to be entered a second time. In addition, shippers have the option of obtaining and archiving spot prices from their freight forwarding partners. This allows companies to manage their entire freight purchasing very efficiently. Another advantage of these rate management systems is that they are very easy to onboard and use and offer a very good cost-benefit ratio.