What is Allocation Management and
how does it work?

Allocation

Allocation is the space an importer or freight forwarder reserves on a carrier.  That space is allocated (hence the term “allocation”) to the client.  It sort of guarantees space on a vessel and the terms are documented in contract Service Level Agreements (SLAs) with the shipping lines.  Supply chains operate on bespoke planning and execution, so importers strive to reserve space at the best possible price, with the guarantees to have enough space reserved.  Contracts are typically negotiated for 12 months.

Allocation management

Allocation management is optimizing the use of the booked space on carriers to meet shipment needs while adhering to contractual agreements (SLAs). Ensuring efficient use of allocated cargo space involves:
  • Ensuring the product being shipped and the container configurations comply with carrier conditions for that shipping lane
  • Combining or splitting shipments among vessels to optimize delivery time and costs
  • Combining or splitting shipments among carriers to use the reserved allocation by the end of the contract period to comply with SLA’s and avoid penalty fees
  • Tracking each booking and monitoring adjustments in real-time
Today many importers still manage allocation manually.  This is a heavy process that requires:

Accessing carrier websites

Moving information manually into spreadsheets

Frequent email communication with carriers using these spreadsheets 

Trying to keep data between unconnected sources accurate

Trying to manually track used-up allocation

Managing allocation is time intensive, and doing it manually is prone to human error.  It may be sustainable for smaller importers but does not scale.  Mid-sized and larger companies manage allocation with software.

Allocation management software

Allocation management software helps businesses reduce time investment and human error connected with endless emails and tangled spreadsheets.  Software addresses two business models that are often promoted similarly but are actually very different.

Multimodal platforms

These SaaS platforms cover rail, road, ocean and air transportation (or some combination thereof).  Broadly speaking, multimodal platform offer broad functionality, but not deep. 
Pros
These platforms provide detailed visibility into important metrics such as container location, estimated times of arrival (ETAs), payments, returns and more across multiple modes of transport.
Cons
While excellent for overviews and dashboards, they lack the flexibility to scale within a transport mode. For example, if a client’s supply chain is a mix of road but mostly maritime, the features may be satisfactory to manage road transportation, but the client might struggle to find advanced features to effectively managing larger maritime logistics.

Single-Mode

These SaaS platforms are experts at one mode of transportation (e.g. ocean transport).  A single-mode platform is most relevant to a larger business that transports the majority of its supply chain by that mode – for example in the ocean transportation space.
Pros
In-depth features
Deep functionality across important workflows such as:
  • Managing carrier contracts
  • Configuring cargo space allocation
  • Managing shipment forecasts
  • Generating consumption reports
  • Configuring automation rules
  • Auditing carrier invoices
  • Tracking containers
  • Reporting on contracts (owned or negotiated by freight brokers)
Adaptability
The deep functionality can easily adapt to client workflows.
Deep insight
Provides detailed operational insights beyond dashboards, enabling process improvements and cost reduction.
Cons

It aligns to the needs of mid to large companies with team members dedicated to specific transport modes. Single-mode solutions can be plugged into multi-mode platforms but as we all know, trying to manage one set of KPI’s through multiple systems is a bumpy process.

How allocation management works in Cargoo

Cargoo’s allocation management seamlessly integrates ocean freight supply chain processes for ocean freight:

Procurement (contains the RMS)

Involves tendering and securing carrier allocations at optimal rates, followed by auditing carrier invoices to ensure they align with contract terms.

Planning (contains the OMS)

Focuses on ordering from suppliers and planning the most cost-effective delivery of those orders to the importer.

Execution (contains the DMS and TMS)

Handles the execution of Shipping Instructions with the help of supply chain partners (suppliers, carriers, customs, port authorities) while consolidating documentation into one tool for easy sharing.

Control Tower

Provides Supply Chain managers the dashboards and reports with key metrics such as Container Capacity Utilization (CCU), ETA Tracking, Detention and Demurrage (DnD), and Allocation Consumption.  Cargoo supports Supply Chain leaders to enhance reports answer difficult “why” questions, and optimize processes.

A key differentiator for Cargoo is its ability to leverage planning and procurement data (including all carrier conditions) in the execution steps. For instance, shipment reports use SKU-level details from PO’s. This allows clients to drill down container content to the SKU level, providing precise visibility into where inventory is.

Cargoo integrates data from procurement, planning and execution to provide the users a real-time overview about used up allocation and available allocation. It provides optimization and set up functionality to spread the allocation based on various criteria over the period of the agreement.
Allocation Management Secure carrier space, manage consumption, and avoid costly penalty fees – even for the most complex port  and container configurations.   

How Cargoo combines RMS, OMS, DMS, TMS data to manage allocation.

Allocation management dashboards in Cargoo

Cargoo can support clients to create interactive dashboards where every dashboard element interacts with all underlying data.  Simply click to drill down.

Experience Allocation management

Explore the depth in which Supply Chain managers configure bookings.

What is the value of Allocation Management in ocean freight logistics?

Beneficial Cargo Owners (BCOs) can gain several key advantages through effective allocation management, including:
Minimize costs

Securing annual space requirements enables companies to negotiate better shipping rates. By tracking remaining allocation on each shipping lane, businesses can avoid extra costs, such as penalties or expensive last-minute spot bookings. Fulfilling the agreed terms is key to a successful partnership with the shipping lines.

Streamlined operations

Clear oversight of contracts, rates, and allocation allows supply chain managers to better coordinate with partners, minimizing errors and reducing delays.

Improved reaction time

Knowing the exact remaining allocation across all lanes allows for faster decision-making when disruptions occur.

Audit carrier costs

Ensure accurate invoicing by matching carrier invoices with contract terms, helping to prevent overbilling.

This comprehensive approach ensures that BCOs can optimize their logistics operations while keeping costs under control.

What Features Should You Look For In An Allocation Management Tool For Ocean Freight?

For businesses handling large maritime volumes, it’s worth considering specialized platforms that offer:
Pre-Configured Ocean Freight Operations
Ready-to-use features, requiring only minimal setup.
Detailed Features that can easily adapt to your processes
Different vendors offer various capabilities, making comparison challenging. Essential features to look for include:
  • Contract Management: upload contacts in bulk or individually, or manually set allocation rules per carrier
  • Allocation Configuration
  1. Define any port-to-port combination
  2. Set allocation by country, route, liner service or vessel
  3. Define container pick-up and drop-off points
  4. Define commodity types by container and carrier route
  5. Define container allocation by week or distribute allocation over contract duration
  6. On-screen editing of volume allocation for current, future or past time periods
  7. Realtime fulfilment updates by carrier, real-time container tracking and rates so buyers can make the best purchase decision
  • Forecast Management: clear overview of all shipments per contract and critical updates
  • Allocation Reports: historical data on carrier allocations and contract fulfillment
  • Percentage Assignments: set carrier allocation percentages by company, route, or cargo type for specific time periods.
  • Audit carrier invoices

A single platform for seamless collaboration with all supply chain partners, including Electronic Data Interchange (EDI) connectivity with ocean carriers.  This ensures real-time, accurate data from a single source of truth.

Customizable reports by location, carrier, or timeframe, offering detailed insights into completed or at-risk bookings. Advanced platforms include reporting “owned” carrier contracts or contracts negotiated by freight brokers.

Collaborative Platform

A single platform for seamless collaboration with all supply chain partners, including Electronic Data Interchange (EDI) connectivity with ocean carriers.  This ensures real-time, accurate data from a single source of truth.

Flexible Reporting

Customizable reports by location, carrier, or timeframe, offering detailed insights into completed or at-risk bookings. Advanced platforms include reporting “owned” carrier contracts or contracts negotiated by freight brokers.

Why Cargoo stands out among Allocation Management products

Cargoo clients have noted significant improvements in their supply chain operations. Below are examples of client feedback, expressed through both measurable results and qualitative statements.

Qualitative benefits reported by Cargoo clients

reduction in the time required for Shipping Instruction submissions (see more)

fewer emails when updating clients (see more)

Within one year of using Cargoo, a large BCO improved its booking compliance with carrier contract conditions from less than 30% to over 70%.

Cargoo clients mentioned they appreciate
Full oversight of the bidding process by carrier
  • Ability to execute carrier specific bidding rounds (each bidding round is independent with different deadlines by different carriers)
  • Ability to set target rates individually by carrier
  • Ability to award lanes to carriers
Create a freight contract with one click
Cargoo “freight tendering” uploads 12’000 rates instantly with no data mapping and no conversion.  When ready, you can create a freight contract with one click and store your rates instantly. 
Direct Spot integration with carriers
API integration with leading carriers means spot transactions can be completed directly within Cargoo.
Ability to delegate the booking process
Cargoo allows Supply Chain leaders to delegate tasks to any supply chain partner (e.g. the forwarder, the supplier, the wholesaler, etc.).  One innovative client delegates bookings to a partner that is not a forwarder, thus removing a step in their supply chain and pocketing the margin.  Shipments are still executed under the client’s contract rates, and the client retains full visibility throughout the process.

Benefits of managing ocean freight allocation with Cargoo

In conclusion, an effective allocation management tool for ocean freight should offer pre-configured features that minimize setup time, detailed customizations to fit specific business needs, and collaborative capabilities for real-time data sharing across the supply chain. Additionally, flexible reporting and the ability to delegate tasks while maintaining control are essential for optimizing operations and reducing costs.

Cargoo is possibly the most advanced SaaS platform dedicated to maritime freight logistics.  It is trusted by some of the world’s largest brands and other large importers.
TEU’s processed / day
*(as of 30.07.2024)
11,000+
Shipments processed / day
*(as of 30.07.2024)
8,300
Lanes covered
*(as of 30.07.2024)
33,600
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