Why should a European transportation management system (TMS) differ from a US TMS? Because geography and demographics demand it.
There are more than 40 countries in Europe, of which the 27 member countries of the European Union (EU) form an area that is less than half the size of the US, but with a population that is 50% larger – not to mention 23 official languages! And while the EU has brought a level of economic, trade and political standardization to its member countries, there are still diverse freight rating methods, regulations, infrastructure and carrier networks that exist from country to country, whether part of the EU or not. This drives a level of complexity in transportation and trade that is not seen within the US domestic marketplace.
No Uniformity Leads to Disparate Rating by Carrier
When it comes to freight rating there is an assortment of rate calculation methods that European carriers can use. Because there is no uniform Postal Code system across Europe (although most countries do have their own), the impact is that rate-zone definitions differ by carrier, service (i.e., international vs. domestic) and country. These rate zones may be based on a combination of country postal codes, cities, regions, countries, etc. This is vastly different from the US, where carriers use the single zip code system to define similarly structured rate zones.
Additionally, although an estimated 75% of European freight goes by road, there are no common European-wide tariff structures like those found in the US, such as ‘CzarLite’ and Yellow Freight. Therefore, freight rating is done on a per-carrier basis, typically based on zones, weight, volume and distance, but also using other unique criteria such as load metres (one metre of loading space of a truck’s length) and number of packs. These multiple parameters, along with the use of different currencies, add further complexities, for both the calculation and the cross-comparison of rates for different regions.
In Europe, it is much more likely you’ll face additional documentation and reporting requirements due to individual country regulations. Just like in the US, “international shipping” adds another layer of complexity in terms of documentation and customs requirements. Goods (in free circulation) transported within the EU can move with a minimum of documentation (a Delivery Note or Packing List is generally sufficient). However, any shipment leaving the EU is mandated to be electronically reported to customs, with many member states using their own unique e-customs system and reporting infrastructure versus the US’s single Automated Export System (AES). In addition, shipments need paperwork to travel, which can vary by country of export, country of import, as well as the countries that the goods may pass through on their way to their final destination. Thus, shipment execution using a European TMS requires strong documentation capabilities alongside the need to integrate with multiple e-customs systems.
Many Carriers, Many Ways of Operating
In terms of carriers, the European market remains fragmented with an abundance of small country and regional-specific carriers, despite recent mergers over the past several years. In the case of larger carrier organizations that have grown by acquisition, one may deal with a single entity from a contract negotiation basis but then have to work with different carrier entities from an operations perspective. This is particularly prevalent when shipping from multiple countries where a carrier’s domestic country network may often continue to operate as they did prior to an acquisition. The challenge from an operational perspective is that a TMS needs to adhere to multiple formats for labeling, documentation and tracking number generation, and integrate with multiple systems for electronic exchange – all for a ‘single’ carrier.
Internationalization for Localization
Finally, and by no means unique to TMS systems, is Internationalization (known as I18N), defined by the World Wide Web Consortium (W3C) as follows:
“Internationalization is the design and development of a product, application or document content that enables [sic] easy localization for target audiences that vary in culture, region or language.”
Localization in terms of the user interface as well as outputted documentation and external integrations needs to be supported, which means multiple languages; different number, date, and time formats; and multiple currencies and units of measure. There is also the added complexity that the information can be shared among multiple parties and each party expects it to be presented to them in their preferred format and language.
Taming the Beast
In summary, a European TMS must have the flexibility to handle a diverse landscape that includes many more unique carrier-, country- and user-specific requirements than that of a US-based TMS. This complexity includes a broad range of connectivity to carriers and customs, differing rate structures and international shipping and usage requirements. Couple that with changing regulations and ongoing carrier merger and acquisition activity at any given time and you can see how shipment execution is a different beast to tame across the pond.
Paul Murphy is the VP Product Management for Precision Software, a division of QAD Inc. and has over 15 years experience in the Supply Chain Management Industry. Murphy joined Precision Software in 1996 as a Software Engineer and was one of the key members of the team that developed the first iteration of the PRECISION solution. He has held various roles in Product Development, Services and Product Management. Prior to the acquisition of Precision by QAD, Murphy was the CIO at Precision and a member of the Board of Directors. Murphy graduated with a B.Sc. in Computing Science from the University of Ulster.
Jack Moloney is a VP Development for Precision Software, a division of QAD Inc. and has over 10 years experience in the Supply Chain Management Industry. Jack joined Precision Software in 1998 as a Software Engineer and subsequently lead the design and development of the company’s parcel carrier integrations. He has also worked on the design/development of the PRECISION solution’s Routing Guide, Freight Management, and SOA integration. Moloney graduated with a B.Sc. in Computer Applications from Dublin City University.