Leveraging AI in Freight & Logistics: A Comprehensive Overview (Part 1)

 Beyond cost efficiency into resilience with the help of AI in freight and logistics.

When tedious manual operational tasks bog you down, managing freight & logistics can be overwhelming. But What if you could find a quick way out and also see how much better your operations could be?

That's exactly how AI helps you streamline operations. 

AI transforms logistics from mere cost-cutting into a strategic helm steering business continuity. 

Sure, implementing AI can be complex, especially if you aren't aware of its capabilities. But don't worry—this guide will equip you with the essentials of AI in freight and logistics. 

We'll break it down into two parts to keep things simple yet comprehensive. With that said, let's dive into part one to explore how AI reshapes procurement and freight.

AI for freight procurement: Sourcing beyond cost efficiency

Procurement used to be a primary mechanism of cost control—find a "cost-efficient" supplier and double down on quality inspections.

However, that option is no longer viable when transparency is the key to any successful business.

AI has turned procurement into a pivotal part of business strategy. It's no longer just about saving money; it's about strengthening your supply chain, minimizing risks, and ensuring resilience against global disruptions.

So, what role does AI play in this transformation? When it comes to AI for procurement, here are three new layers of capability your supply chain can upgrade to with ease:

• Supplier discovery and selection: Leveraging AI for strategic choices

After a certain point, finding the right supplier can feel like a daunting task. However, AI solutions help you hit the jackpot before you give up.

AI processes mountains of data in seconds. Its algorithms evaluate suppliers on details like performance history and market intelligence. With AI for procurement, you're not just picking the cheapest option—you're choosing the smartest one.

Experts in supply chain AI, such as Pando, demonstrate this capability effectively. Pando's freight procurement solutions leverage AI to look for carriers and suppliers beyond just price. It also focuses on long-term reliability, historic performance, diversity, and inclusivity in supplier selection.

Moreover, AI can also consider sustainability as a criterion and find you the best performer during market disruptions. This way, every procurement decision saves money and strengthens resilience.

• Bid management: Intelligent analysis for cost and service efficiency

Quality and cost are the true north when selecting the right bid. However, the complex process often fizzles into a compromise between the right trade-offs. 

With intelligent analysis, AI drives you back to the primary goal: optimized costs with service excellence. It delves into past bids, pricing trends, and volume forecasting for a clearer, data-driven picture. It also streamlines the bid evaluation steps and aligns decisions with long-term strategic goals.

• Contract negotiation: Deep research for better deals

From legal forms to rate negotiations, navigating contracts in freight & logistics could demand a lot of attention, even for experienced businesses. AI automates such manual efforts and helps you develop the best offer to close the deal with suppliers. 

It can analyze historical data and market trends to pinpoint the best rates and flag any tricky clauses from the past. Plus, It can suggest more favorable terms based on current market conditions. It also speeds up the legal review, so closing deals doesn't hinge solely on lengthy negotiations. 

AI-powered contract negotiation helps logistics managers award the right contract to the right vendors.

• Risk management: For calculated risks 

The procurement sector is fraught with potential financial instabilities and supply chain disruptions. AI mitigates these risks by using advanced analytics to foresee and highlight potential threats well in advance.

 For instance, AI can signal if a sensitive supplier is facing financial trouble by examining their latest quarterly reports and delivery performances. This allows you to secure alternatives before an issue escalates.

AI for transportation costs: Predictive analytics in freight rates

Once you establish your supplier network, managing transportation becomes a critical focus. Notably, transportation costs account for 38% of the total product cost.

When freight rates fluctuate, managing freight & logistics costs often involves tedious rate negotiations and intense bargaining. Leveraging AI in logistics brings order to this process.

For instance, you can use predictive analytics powered by AI to efficiently forecast freight rates by analyzing data points such as fuel prices, weather patterns, and historical trends.

 Next, let's understand how to drive change with AI in transportation and logistics.

1. AI for accurate rate predictions: No guesswork

Freight rates are notoriously unpredictable, but AI technology can forecast these rates with remarkable accuracy.

AI provides precise short-term forecasts and practical long-term plans, regardless of fluctuations in fuel costs or changes in demand. This not only improves your resource planning but also optimizes how you allocate your vehicles.

Moreover, AI helps you secure lower rates and develop strategies to prevent overpaying. It can even recommend cost-effective alternatives by comparing different shipping routes and schedules.

In this regard, Pando leverages AI-powered real-time logistics data to ensure that your freight forecasting remains relevant and flexible so that you can plan proactively amidst dynamic market situations.

2. AI in cost optimization: Achieve significant savings

Given that US freight and logistics expenses exceed 2.3 trillion dollars, leveraging AI for logistics can have a substantial impact on your financial efficiency.

Once you know your freight rate patterns, your business can make smarter decisions.
If AI predicts a spike in freight rates next month, you can easily secure better deals or reroute shipments to save costs. Your optimization strategies may also include holding off on non-urgent shipments to achieve significant savings.

3. AI-powered risk mitigation: Proactive planning at its best

Freight rate forecasting involves more than just predicting costs; it's about planning strategically for unexpected expenses, which might include weather disruptions or regulatory changes.

AI has the ability to flag potential crises ahead of time, such as a brewing hurricane in a vital shipping region, allowing you to take proactive measures before it gets too late. 

AI also plays a critical role in preventing the costly loss of goods and maintaining smooth supply chain operations. This comprehensive approach ensures that your business is prepared for the worst while operating at its best.

AI in freight optimization: Efficiency in every mile

Now that we've covered procurement and freight rates let's talk about the final module of this part—freight optimization.

Route optimization saves 20% on fuel costs and 70% on route planning time. However, manual route optimization is prone to costly human errors and tedious reworks. That's where AI comes into the picture. 

In route planning or load management, AI ensures maximum efficiency in your transportation without burdening the system. It can even impact driver behavior and satisfaction.

AI freight optimization solutions will save you millions, just like Pando's transportation management system (TMS) saved $20,000 monthly for a leading confectionary player.

 However, it's worth remembering that AI doesn't just help you predict what's coming—it helps you optimize what you've got.

1. Route optimization: Less time, more savings

Just like your GPS finds the quickest way around a traffic jam, AI optimizes routes in freight & logistics.

AI gets you the most efficient routes by analyzing real-time traffic data, fuel costs, and carrier performance. It also helps digitize your entire supply route. Whether it's bypassing a traffic jam or rerouting due to bad weather, AI moves your shipments fast and shows you how.

With AI-powered TMS, your business optimizes not just for speed but also for cost and sustainability. This also means lower emissions and positive environmental impact.

According to British oil company Castrol, "Pando TMS helps plan efficient routes and consolidate loads, reducing fuel consumption and improving resource utilization."

2. Carrier selection: Pick the right partner every time

Selecting a carrier goes beyond just finding the cheapest option. It's about finding a partner who is reliable, sustainable, and cost-effective.

AI-driven freight procurement systems assess carriers on multiple fronts to get you the best match for your shipment. These criteria include carrier performance, sensitivity of the goods, distance from the pickup point, vehicle type, and the intended route.

Using AI, your business can seamlessly combine reliability and cost-effectiveness in carrier selection, all in real-time. This ensures you pick the right partner every time, enhancing your operational efficiency.

3. Load optimization: Maximum efficiency with minimum waste

The role of AI in transportation and logistics extends beyond just route optimization. It can also be applied to load management activities such as consolidating shipments and maximizing space utilization. How does load management create that much of a splash? Imagine your daily vehicle trips are only 80% full. Increasing that by 20% saves you the cost of an entire trip in four days.

AI helps you analyze shipment data such as vehicle capacity or shipment weight and can be integrated with 3D-vehicle scanners. Based on this data and your delivery or pickup schedules, AI will help group orders or adjust schedules to maximize load optimization.

After implementing Pando's AI-powered Transportation Management System, the American manufacturing giant Cummins reported, "Pando helps us with load optimization and provides the visibility to the customer on a single platform." This demonstrates the tangible benefits of using AI to streamline logistics operations.

Steer the AI revolution in freight and logistics with Pando

AI is revolutionizing freight and logistics, turning traditional processes on its head. Procurement is no longer just about saving money. Thanks to AI, business mindsets are shifting towards building a resilient and agile supply chain. From smart supplier selection to freight route optimization, AI for logistics constantly empowers businesses.

In fact, with solutions like TMS and freight procurement, AI undoubtedly helps steer freight and logistics as a strategic function. That said, this is just the tip of the iceberg. Stay tuned for part two, where we’ll delve into how AI extends to intelligent invoice management and enhanced supply chain visibility.

It's time to empower procurement and freight — consider Pando for your business. Book a demo today!