2025 Freight Payment Update: A quiet revolution underway

The freight bill payments industry is grappling with a branding challenge. Its traditional name no longer reflects the expansive scope of services it provides today. What began as a simple process of paying bills and verifying invoices has evolved into a multifaceted industry offering a wide array of value-added solutions.

With freight shippers constantly asked to perform more functions with fewer people and smaller budgets, freight bill payment companies have undergone a quiet revolution. Indeed, they now offer more valuable tools, allowing them to track shipments, eliminate waste and redundancies, and provide AI-related intelligence in their planning of routes as well as carrier and modal choices.

In fact, freight bill payment companies now offer automated payment solutions that can track and report delivery performance along selected lanes and city pairs. They also process and pay invoices, provide detailed reports highlighting savings opportunities as well as conduct audits.

“If shippers are looking for some sense of stability and predictability in 2025, they may be disappointed as rates could change overnight based on external factors such as hurricanes, geopolitical issues, or other unforeseen events,” says Mike Regan, chief relationship officer and founder of TranzAct, which offers varieties of additional services for shippers wanting to cover all contingencies in their freight moves. “If you don’t develop contingency plans, you could see your freight costs go through the roof and a lot of confusion within your organization.”

Let’s take our annual deep dive into the freight bill payments sector to discover which services are being requested by shippers. We’ll also examine the differences between small, family-operated businesses and the big, multi-national corporations that offer the services. Here’s a few things toconsider when making the decision.

“If shippers are looking for some sense of stability and predictability in 2025, they may be disappointed as rates could change overnight based on external factors such as hurricanes, geopolitical issues, or other unforeseen events…If you don’t develop contingency plans, you could see your freight costs go through the roof and a lot of confusion within your organization.” —Mike Regan, TranzAct

Freight classification changes coming

Regan of TranzAct and freight analysts agree that in 2025, shippers should expect to see continued volatility in rates—especially in trucking and ocean markets. For example, late last year, spot market rates in the truckload sector surged by 17%. A combination of factors were cited, but mostly it was owner-operators returning to the market because of declining diesel fuel prices throughout last year.

“It’s more than a little mystifying to me as to why we’re seeing more entrants in the marketplace,” says Avery Vise, trucking analyst for the research firm FTR, which closely tracks the market. “Spot rates were consistently down year over year. But if you adjust for fuel, they’re actually up a small amount.”

Vise and others are expecting to see continued variability with less-than-truckload (LTL) costs. With the pending changes in freight classification ratings from the National Motor Freight Traffic Association (NMFTA) slated to begin early this year, shippers can expect changes in their freight
rating classifications.

This is an area where hiring a reputable freight bill payments company can pay early dividends, officials say. Shippers without freight “dimensioning” technology (machines that accurately calculate every freight piece’s exact height, width and depth) may be surprised when they see variances between what they thought their freight charges would be and what the carriers actually bill them for the freight being handled.

In the truckload market, Regan thinks carrier viability will be an issue when it comes to capacity in the marketplace, leading to rate volatility. As the truckload market is trying to emerge from this historic freight recession, small- to mid-size trucking companies are facing continued financial pressures, and he says he expects some of these carriers to either close their doors or be acquired. “This could reduce capacity and cause some carriers to seek more aggressive rate increases.”

With National Motor Freight Classification (NMFC) changes approaching quickly, an inch here and an inch there could cost shippers thousands or even hundreds of thousands of dollars in additional freight charges. “Whether you know it or not, there are lots of business decisions affecting freight costs being made by people who know very little about how their decisions will affect freight costs,” adds Regan.

Add it all up and the equation means changes in the “three Vs” of freight—volatility, variability, viability—that will affect virtually every sector in the transportation marketplace. Let’s see how the freight bill payment industry is helping lead the way with ranges of logistics solutions.

A view from above

Jeff Pape is general manager of transportation for U.S. Bank’s Corporate Payment and Treasury Solutions. U.S. Bank’s freight payments business processed $42 billion in 2023 for some of the world’s largest corporations and government agencies.

With freight spend 3% to 12% of total revenue for most product-based companies, for most product-based companies, leveraging this spend to improve working capital through trade finance is a win-win, U.S. Bank officials say. In fact, U.S. Bank freight payment lets shippers hold onto their cash beyond the typical 30-day payment terms.

“With elevated interest rates and other costs, as well as fluctuating freight demand and carrier capacities, customers are focused on driving down costs,” says Pape.

So, what U.S. Bank services seem to be having the biggest impact in the market? According to Pape, nearly all shippers and carriers are seeking ways to do more with less and are increasingly taking advantage of automation and digitized self-service capabilities. This includes integration with APIs, more intuitive user interfaces, and improved data outputs.

According to Pape, these tools help shippers retire legacy technology, streamline processes and automate workflows that have historically been paper-based and heavily manual.

U.S. Bank’s size and financial strength can translate into savings and efficiencies for its freight bill payment customers, he adds. “We’re a full-service, federally regulated financing and payments provider that has been in the freight payment space for more than 25 years.”

U.S. Bank’s solutions improve working capital, strengthen carrier relationships, increase visibility and financial control and deliver actionable business intelligence for improved supply chain management and decision-making, according to Pape.

Pape was asked with so many “mom and pop” operators in the freight bill payment space, what advice do you give shippers on their choice of freight bill payment offerings? “In addition to selecting a freight payment partner that has leading-edge technology to help them reduce spend, companies should seek a true, long-term partner,” he replied. “Real savings will never be gained if they don’t have the support they need, when they need it.”

Pape adds that a top priority should be selecting a payment provider that places the utmost focus on data security. “It’s critical that the partner has the infrastructure in place to protect their information, as well as the data of their customers and vendors,” he says. “The most exciting advancements have been in the ability to harness actionable information that removes guesswork from decision making.”

Game of inches

In the LTL arena the “little things can make a big difference” principal plays out on how shippers manage their freight dimensions. For example, when one LTL carrier recently demanded a sizeable increase for a shipper, citing that the density in pounds per cubic foot had changed significantly, the shipper put in a call to TranzAct.

“When they got in touch, the shipper questioned how the density and freight class could be an issue because their products had always been rated as class 70 products,” says Regan.

When he toured the warehouse, Regan got his answer: Roughly 20% of the pallets had about an inch of overhang. That one-inch overhang caused the shipments to take two pallet spaces instead of one, completely changing the pounds per cubic foot.

According to Regan, that’s why it pays to educate the shippers who are using FedEx and UPS as well as well as LTL carriers about how accessorial charges or service levels can affect their company’s freight costs. It’s also another reason to engage with companies like Cleveland-based CT Logistics and others in the freight bill payments space.

Allan Miner, president of Cleveland-based CT Logistics, a 101-year-old family operation, says business is solid. “Business is up and it’s looking good,” he says. “It’s stronger than I would have predicted a year ago when I thought there might be a recession. The U.S. economy remained very strong. We’re getting business from competitors weaker in areas where we excel.”

According to Miner, one of those areas is business intelligence. CT Logistics and other freight bill payment companies are able to perform what Miner calls “deep dives” into their supply chain data to decide what-ifs. What if they close Suez Canal? What if supplier in China is cut off?

“We do a lot of what-ifs to give clients the ability to pivot very fast without disruptions to their clients and their bottom lines,” Miner explains.

CT has more than 30 years’ worth of relationships with regional carriers and competitors. So, when Yellow closed its doors in early August 2023, CT found solutions for ex-Yellow customers that gave them capacity without interruptions.

Freight bill payment auditing is 70% of CT’s business, says Miner. Other clients that began with freight bill payments have morphed into clients with what Miner called “stickiness to us” because of the loss and retirements of former traffic managers with decades of experience.

This new generation isn’t familiar with all the nuances and nuts and bolts of traffic management,” adds Miner. “That’s where our bench of experienced personnel comes in to fill their needs. We do analysis, do their bids on LTL and TL, air cargo. We do all the what-ifs. That’s where our 101 years of expertise comes into play. We’re not rookies at this.”