The state of logistics in 2021 continues to undergo transformation and disruption (continued from 2020), and while companies are looking for new logistics strategies to stay proactive, there comes a point at which supply chain leaders need a simple, fast way to view market conditions. That’s especially true for organizations looking to manage e-commerce. Remember that the unprecedented demands of e-commerce have also added pressure on shippers to find capacity throughout all industries. Meanwhile, those same effects carry over into carrier responsibilities to strategically allocate assets. Note, however, that the ability to apply data depends on the actionability of information. That’s where freight indices come into play.
These factors are further seen in top-industry trends. As reported by Supply Chain Digest, “Online shopping is rapidly increasing as a share of retail sales, creating new demands for faster and cheaper delivery of goods straight to consumers. This trend is changing land use patterns and contributing to increased truck traffic and competition for curb space in residential areas. Emerging technologies from automation to delivery drones to the Internet of Things have the potential to transform the freight industry, disrupting old business models and changing the nature of freight jobs.” Clearly, the need for technology is absolute. And national freight indices are helping all freight management segments boost pricing strategies and understand how to better prioritize their operations.
Characteristics of SONAR-powered indices
The most advanced freight indices leverage real-time, historic and invoiced freight data to provide more insight into all operations and enable strategic competitive advantages. As examples, the characteristics of SONAR indices have helped to build the reputation of the SONAR freight forecasting platform and include:
- Larger sample size. A larger data sample size amounts to better information, leading to SONAR’s ability to show potential trends to better pre-empt market volatility.
- Consistent data collection. Consistency in data aggregation and analysis are key to maintaining index validity, applicability and actionability.
- Near-real-time data. Gathering data after the fact is standard, but collecting data in near-real-time is even better. Even data that’s captured weekly, such as the DHLPPI.USA, can be more valuable when viewed in the context of near-real-time SONAR indices.
- Instantaneous analysis. Using near-real-time data is also a critical step in applying and deriving fast, actionable analytics.
- Network-wide views. SONAR provides the ability to look beyond a 3PL-specific or carrier-specific analytics software and gauge the full market.
- Creation of meaningful insights. Tracking a singular supply index is not the end of the equation, and by using multiple indices, freight management parties can create additional meaningful insights and supply chain KPIs.
- Drill-down functions. Seeing a market-wide logistics business index can help, but it should also give a user the ability to drill down into the data and understand its contributing factors, such as viewing the ITRI.ATL to see market-specific details.
- Dynamic development. SONAR and its indices are being further developed, refined and expanded by FreightWaves data scientists. They continuously revise algorithms and develop new indices that will add value for subscribers, regardless of whether a shipper, broker or carrier as well.
How freight segments use freight indices
All freight management segments can deploy a mix of various indices’ insight to understand different aspects of their operation. For instance, trucking KPIs and related benchmarking metrics can be viewed as a way to measure overall profitability for brokers and carriers.
|Segment||Tendering||Resource Utilization||RFP and Onboarding||Strategic Growth|
|Broker||Offer the right rates to carriers
||Move assets based on demand
||Use data to align RFP quotes to market conditions & seasonality||Enable strategic growth with the right carrier & shipper network|
|Carrier||- Set rates to avoid losses
- Know when and where to reject loads
|- Move assets based on demand
- Offer more competitive rates for equipment/driver
|- Increase driver hiring processes
- Create competitive rate schedules in RFP responses.
- Enter new lanes
|- Add lanes
- Avoid overspend
- Plan routes
- Consolidate freight
- Take advantage of backhauls
|Shippers||- Increase acceptance rate
- Lower freight spend
|Avoid overscheduling or overambitious tendering practices||Increase carrier/broker relationships to secure more capacity||Enable future-proof growth strategies, including all supply chain needs|
|Analysts||Understand current tendering practices||Recognize hot versus cooling markets||Provide more concise, accurate consultancy services||Stay informed with up-to-date data and insights|
Additional FreightWaves SONAR freight indices used based on segment focus
Any strategy for deploying a freight market index should also consider a simple fact; data grows in value as its variety and detail expand. In other words, data insights through an index within one mode may very well be valuable for additional data-driven transportation management decisions throughout your whole network, not only in trucking. As an additional example, consider these other FreightWaves SONAR indices and their relative modes.
|Freight Segment||SONAR Feature 1||SONAR Feature 2||SONAR Feature 3||SONAR Feature 4|
|Drayage-Focused Shippers, Carriers & Brokers||Ocean Shipments Report||U.S. Port Market Share||Top 100 Import Consignees Report||TEU Volume|
|Carriers’ Preferred Indices||OTVI/ITVI||OTRI/ITRI||ALL TCA BENCHMARKING INDICES|
|Rail Indices||ORAIL.USA & IRAIL.USA||ORAILMS & IRAILMS||ORAILDOM.USA|
|Air Indices||OARIVOL IAIRVOL||Drewry Air Freight Rates (DAIR)||AIRUSD, AIREUR & AIRLOC
Reap the rewards of the right indices across your enterprise with FreightWaves SONAR
Access to data and national freight indices are essential tools in a freight manager’s tech stack. However, the level of granularity must also include a drill-down ability to view the various indices that go into overarching market insights. In other words, the real value of any index depends on the ability of freight management parties to apply that information in local and national markets. And fortunately, SONAR has already taken the initiative by creating that functionality within its lineup of indices and continuing advancements as part of SONAR SCI. Learn more about how to get started by requesting a FreightWaves SONAR demo via the button below.