Are shippers making a mistake with low contracted rates? – Freight Forecasting

Scott MallFreight Market Blog

Freight Forecasting with Michael Vincent

In this episode of FreightWavesTV’s Freight Forecasting, a key question is answered: Are shippers making a mistake with low contracted rates? Jason Miller, Associate Professor of Logistics at the Eli Broad School of Business at Michigan State University, discusses the current freight market and the pitfalls of pulling forward the contracted rate bid cycle with host Michael Vincent.

Watch the episode below:

Miller’s primary research stream examines firms’ logistics operations, with an emphasis on studying motor carrier safety, productivity, and pricing.

Michael and Jason also talk about using SONAR’s Outbound Tender Volume Index (OTVI), Outbound Tender Rejection Index (OTRI), spot rates and macroeconomic indices to prepare strategic plans during an economic recovery. 

OTVI is SONAR’s proprietary index of daily accepted full truckload tender volumes from across the nation and in 135 markets across the country. Increased volumes signify an increase in demand for capacity, while a decrease suggests the opposite.

OTRI measures the rate at which carriers reject customer requests to pick-up freight. The data is heavily skewed towards contracted business, meaning most of the requests are between a carrier and shipper that have an existing relationship and agreed upon rates.

They also explore whether low contracted rates negotiated during periods of crisis present future dangers.

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