Whether it’s ensuring fresh produce reaches grocery stores, new cars are transported from ports to dealerships, or life-saving medical supplies are delivered to hospitals on time, the commercial transportation industry plays an integral role in maintaining the flow of goods and services across a complex web of importers, exporters, third party logistics players and freight forwarders. And its importance is only growing, with businesses all over the world becoming increasingly reliant on the domestic and international supply chains required to connect with their customers.

Yet the freight and logistics industry continues to grapple with a number of payment pain points that slow the industry down, strain relationships and create uncertainty, with the potential to impact billions of people’s lives.

Determining final shipping costs and reconciling invoices have long been sources of frustration in the transportation industry. Unexpected transportation delays, whether the fault of traffic congestion, flight changes, extreme weather events or human errors, often result in costly fees and penalties for shippers and exporters. These unplanned expenses erode important working capital benefits and shrink critical business margins, requiring savvy transportation and logistics managers to identify and adopt smarter payment solutions.

A new global study by Mastercard, based on more than 20 interviews with industry experts and a survey of 200 industry veterans, reveals that current solutions can be costly and too rigid in terms of process, and that there is a pressing need for new solutions that provide both the access to data and greater flexibility that firms need to thrive.

Payment technologies have evolved significantly in recent years and can ease this burden. Here are five payment trends that freight and logistics executives can harness to solve these pain points, unlock new efficiencies and transform their industry. 

Two in five industry participants identified a growing need for digital and real-time payment solutions tailored to freight forwarding’s unique challenges. Finance professionals in the sector can work with payment platforms to increase the digitalization of payments. Digital payment platforms and fintechs are implementing real-time payment systems to facilitate faster settlements and introducing blockchain-enabled solutions to enhance security and transparency for all parties involved. The automation introduced by these platforms accelerates payment processes. Alongside this, integrating the right tools with industry systems, such as enterprise resource planning (ERP) systems and treasury management systems, streamlines operations and improves visibility.

Those working in the industry can take advantage of the broader range of tailored solutions that financial institutions and payment platforms are now offering to help them better manage cash flow and liquidity. These solutions include the new generation of virtual cards, which provide unique card details (including number, expiration date and CVC) for each transaction and can be linked to specific funding accounts. Virtual cards are a fast and automated payment option that eliminates manual processes. They also provide robust controls, allowing companies to specify when, where and how virtual card numbers (VCNs) are used. VCNs keep account information secure while providing flexibility and enhanced security.

Virtual cards can provide an additional 30 to 45 days of float, which is extremely valuable from a freight forwarder perspective. This becomes ever more important as interest rates rise on working capital loans, making money more expensive and significantly impacting businesses that operate on razor-thin margins. Additionally, VCNs come with valuable data that enhances reconciliation. They can also be embedded into a company’s existing ERP or B2B platform, making it easier to streamline operations and scale globally.

Meanwhile, 63% of forwarders and 58% of carriers have never considered accepting a card for freight payments, meaning there is still a role for other solutions, including master merchant or merchant of record solutions, which enable a buyer to pay with a card even when the supplier doesn’t accept card payments.

Card-to-account solutions offer another path forward — allowing buyers to initiate a card transaction that is seamlessly converted into a bank transfer to the supplier. This not only preserves the buyer’s ability to realize the working capital benefits of paying by card, but also ensures suppliers receive funds direct to bank account, without needing to change their existing receivables processes.

As global supply chains continue to expand their footprint, cross-border payments are becoming increasingly important. Among freight and logistics companies surveyed, 36% identified multi-currency payment support as one of the top three features that would most benefit their payment processes.

Industry stakeholders can now work with financial institutions and payment platforms to unlock advanced cross-border payments capabilities that are coming to market. Digital payment platforms can simplify international payments by offering multicurrency solutions, providing tools to manage currency risks, ensuring compliance with local regulations and enabling faster, lower-cost cross-border settlements for the industry.

More than nine in ten (93%) industry participants believe AI will play a significant role in the industry’s future. Integrating AI into freight forwarding workflows can enable more intuitive billing and help rapidly identify customers who may not be fulfilling the terms of their agreement.

AI tools can help transform payment and reconciliation processes by optimizing cash flow management and payment forecasting, while automating error-prone processes — such as invoicing and reconciliation — will help reduce disputes and delays. Finance professionals working in the industry can also help improve their company’s decision making by using predictive analytics and accounts receivable intelligence, which provide AI-driven insights and help predict when invoices will be paid.

Freight payments involve massive transactions that will always attract criminality. Growing cyber threats are driving a need for more robust security solutions. Ransomware attacks, which encrypt critical data and demand payment for its release, are serious threats affecting the industry and can cripple operations. For those working in the industry, comprehensive risk assessments can help identify potential vulnerabilities and threats within their digital systems. They can also work closely with their payments partners to ensure they have implemented the most advanced safeguards, such as encryption protocols and access controls.