Take a moment to think about the pitfalls of profitability over the past year. Going back to spring 2020, it’s easy to see where the problems began. According to TruckingInfo, “As stay-at-home orders in response to the COVID-19 pandemic took hold across much of the country in the latter part of March, the level of freight available – and the rates to haul it – plummeted. This means many of the smallest companies that make up the vast majority of motor carriers are hurting.” However, even larger companies began to experience trouble. As demand for e-commerce accelerated, notes John Koetsier of Forbes, trucking carriers gained extreme favor in pricing power. Unfortunately, that favor, while general, doesn’t always apply to every one of the 135 trucking markets in the U.S. In turn, carrier freight pricing guidance must be attuned to the fluctuations within individual needs, and that’s despite the use of end-to-end trucking analytics. However, peer, market and historical freight invoice data can help, and it’s essential to know why.
Freight management parties still struggle with limited, outdated data
Problems evolving from market disruption share many commonalities. Freight management parties may not know where to turn for meaningful, actionable freight data. Unfortunately, outdated and limited data can be even more disastrous for supply chain decision-making than doing nothing at all. At the same time, data is not created equally. Raw data may sound universal. However, the root-based code’s differences within individual systems will affect trucking data’s applicability and usefulness. After all, data pulled from one system may look radically different from logistics data pulled from another.
Prescriptive truckload carrier freight pricing empowers carriers with a tactical advantage
A successful freight pricing strategy is not as simple as it sounds. While isolating a per-mile rate is great, it does little good to identify the low-hanging fruit that resounds throughout the industry. Think about it. Carriers’ best interests lie in making the most lucrative moves per truck and improving revenue per driver. As a result, the best moves for individual shipments may radically cross one another. In this space, multimodal freight optimization may be necessary, as well as freight consolidation and deconsolidation. In an ideal world, all freight would exist in full truckload. However, that is not reality. The only way to successfully navigate the freight market’s uncertainty and identify which moves, which loads, and their origin and destination pairings is to leverage an advanced analytics engine.
Prescriptive analytics applications within truckload carrier freight pricing mean deriving a tactical advantage within freight management to make the vital decisions. Freight carriers may allocate assets based on the temperature of a given market. And identifying who maintains the pricing power across individual lanes, a measure of lane acuity, will go a long way in allowing those carriers to offer drivers the best rates. Simultaneously, the best rates offered to drivers must amount to accepting an appropriate rate from enterprise shippers. After all, logistics management is about ensuring collaboration and profitability across the spectrum. It is a continuous flow of goods and transactions that enables supply chains to continue operations.
How to leverage data to future-proof your trucking company pricing strategy
Suppose the livelihood of freight management for carriers rests on timely, data-driven decision-making and collaboration. In that case, it is possible to derive a few best practices that allow carriers to future-prove their carrier freight pricing strategies. These include the following:
- Assess whether carriers or shippers control the pricing power for each of the possible origin and destination pairings.
- Recognize the balance between inbound and outbound moves and how that balance may turn a backhaul into a profitable activity for carriers and transportation brokers alike.
- Assess external factors affecting the timeliness and likelihood of delivery on-time and in full.
- Benchmark freight pricing strategies with your cohort by reviewing operating ratios and other freight KPIs.
- Collect, analyze and apply peer, market and historical freight invoice data.
Now take a moment to look at that final bullet. Analyzing carrier freight pricing and invoicing data is not necessarily a game-changing factor in modern carrier freight pricing strategies. However, identifying the trends within invoice data compared to tendered loads available within SONAR can have a lasting impact on a carrier’s ability to maximize profitability per load and derive more value for all freight management parties.
Add value to your network capacity and efficiency with SONAR-driven insights
The best way to expand profitability as a carrier is to charge competitive freight rates. While assessing an over-the-top rate will maximize profitability in the short-term, it will lead to long-term losses and potential rejections by carriers. However, the key to success lies in understanding how far a carrier can push pricing without risking upset to outsource owner-operator drivers and shippers. That is where a comprehensive freight forecasting platform that allows users to benchmark analyze, monitor and forecast pricing trajectories will add the most value. And FreightWaves SONAR makes that possible. What are you waiting for? Request a FreightWaves SONAR demo by clicking the button below to get started.