What Does the Term Capacity Management Really Mean?

What Does the Term Capacity Management Really Mean?

What is Capacity Management?

When we’re talking about freight, capacity management refers to more efficient management of the freight cycle from entering loads into the system to booking them to a carrier. Essentially, it encompasses much of the work that freight brokerages do in their day-to-day.

Capacity management tools may use AI (artificial intelligence) and ML (machine learning) to learn carrier behaviors and, once the system has been fed enough of the right data, even predict those behaviors so the program can make suggestions that help the broker use their carrier network more efficiently.

These systems can either entirely handle or help manage tasks like:

• Carrier relationship management

• Load tendering

• Load matching

• Onboarding

• Carrier outreach

• Receipt of quotes

• Negotiation with carriers

• Booking

Capacity management programs for freight brokers are often integrated into other systems and applications in the tech stack like the TMS and syndication services.

Common Features in Capacity Management Tools for Freight Brokers

There are some features that many capacity management tools share. Some of these features may be available through other systems in the tech stack. For example, some TMS systems have waterfall tendering capabilities.

Carrier Management

Capacity management tools typically include some type of carrier management, where carrier information and preferences can be stored, organized, and searched. Pertinent information about each carrier’s availability and equipment being present right in the system helps eliminate tribal knowledge on the brokerage floor and helps the program predict carrier behaviors to better utilize available capacity.

Waterfall Tendering

Many capacity management platforms offer waterfall tendering, or the ability to automatically offer loads to carriers they’ve already worked with in the past who are likely candidates to want a given load. Waterfall tendering can eliminate a lot of the cold carrier outreach that brokers do every day since ideal matches being sent to in-network carriers may result in a ‘yes’ before the broker has even engaged directly with carriers about a load.

Finding & Booking Carriers

Capacity management tools like Parade typically offer digital freight matching. Digital matching helps brokers match the carriers with loads that are ideal for them. In Parade, for example, when a broker is searching for a carrier for a load, the system will present them with a ranked list of likely candidates, with the best choice (decided based on carriers that will offer an ideal rate, have truck availability, and have already built a relationship with the broker) listed first.

Digital Quoting and Booking

Capacity management tools often enable digital quoting and booking through syndication services and/or private portals. These digital tools allow for a more automated freight cycle and access to a wider carrier network since carriers can quote or even book loads without needing to speak with a broker rep, even after hours.

Internal Reporting

Built-in reporting helps brokers easily track their performance and progress towards goals. Many transportation tech solutions today come with some form of reporting, and ideal reporting within a capacity management solution will allow brokers to monitor KPIs that come in handy when developing new strategies across operations.

What’s the End Goal for Capacity Management Tools?

Here are some of the goals capacity management can help brokerages and asset carriers achieve.

• More efficient use of carrier network to maximize the trucking capacity already at the brokerage’s disposal

• Improved carrier re-use; fewer new carriers to onboard

• Time savings through streamlined processes and automation

• Better carrier relationships

• Improved level of service for shippers

• Ability to grow carrier base

• Increased number of loads booked

• Higher gross margins and overall revenues

Looking to learn more about capacity management and how it could work for your freight business? Be on the lookout for the next  installment in this series so you can learn everything there is to know about capacity management for freight brokers.