Rapid change is taking place across the industry. From shifting national freight patterns to sudden swings in available capacity to extreme weather events, less-than-truckload carrier pricing needs to be flexible and responsive to a range of factors for the industry to operate efficiently.
Transparency into real-time market conditions results in a mutually beneficial relationship between LTL carriers and the shippers they serve. The use of dynamic pricing helps facilitate a positive relationship, allowing shippers to get the most competitive quote based on true freight characteristics of the shipment, the service requested and the current state of the market. And carriers get to be strategic in attracting freight where and when they need it.
Dynamic pricing helps carriers be competitive by allowing them the agility to adjust pricing at a moment’s notice to respond to internal and external events. Maintaining accuracy at all times is often a concern. There are a number of factors to consider, such as operating costs, labor availability and current capacity — a task that is almost impossible without a tool to help do the math.
The majority of an LTL carrier’s customer base today is on static contractual and common carrier pricing agreements. However, the carrier often needs the flexibility to change prices for specific segments of its business at any point in time to react to rapidly shifting internal network needs and current market conditions.
Conversely, there are times when the carrier has lanes or locations with more freight than the network can efficiently service. In those instances, the carrier can increase its margins by raising prices at the expense of handling additional business.
Dynamic pricing allows carriers to change prices immediately to respond to these internal events — excess capacity in specific lanes, congested lanes or changes in costs from interline providers. According to Brian Thompson, chief commercial officer at SMC³, it also helps with response to external events — weather, construction or changes to purchased transportation costs.
Shippers want to know that they are getting the best prices to ship their freight. And they rely on a network of carriers. Knowing they are getting the best prices from carriers allows them to have a more robust network, and that’s good for their business.
Thus, shippers don’t have to worry about complex base rates and discounting or freight-all-kinds structures. The shipper is getting an accurate and competitive price because it’s based on the complete characteristics of the shipment being quoted. Shippers need accurate rate quotes so they can select the carrier that best meets their strategic requirements and manages their transportation spend.
Carriers need to have confidence in their pricing strategy, knowing that they are quoting prices that are competitive in the market to strategically manage their business and beat out the competition. Additionally, they are looking for ways to attract new business and need the ability to adjust pricing at a moment’s notice to align with current capacity. In a perfect world, they would have a tool that reduces the time and resources necessary to respond to the volume of quote requests.
“Carriers often price conservatively when there is uncertainty, which is invariably the case when establishing long-term contractual rates. However, carriers are able to offer their most competitive price when supplied with accurate, real-time information with all the specifics about the shipment they are asked to quote — they know when the shipment is expected to move,” said Thompson.
It’s a win-win situation. Dynamic pricing allows carriers to significantly “sharpen their pencils” and offer their best rates — a key benefit for shippers in today’s market.
Averitt, a top LTL carrier and supply chain solutions provider, is no stranger to the complexity of LTL pricing and responding to LTL quote requests. Always wanting to lead the way with innovative solutions, Averitt has partnered with LTL technology solutions leader SMC³ to bring a unique dynamic pricing methodology to the market.
SMC³’s Dynamic PriceBuilder approaches the fundamentals of dynamic pricing in a different way to ultimately match a shipper’s need to move freight at a fair market rate with the carrier’s need to fill capacity.
Dynamic PriceBuilder is unique as it is the only commercially available tool that uses a carrier’s specific prospective cost model and layers it on top of a business rules engine to deliver unique quotes. Specifically, it couples the carrier-managed business rules engine with the carrier’s prospective cost model to drive timely, targeted and precise high-speed analytics to enable flexible dynamic price generation for LTL carriers.
SMC³ has more than 87 years of LTL pricing expertise, and its innovation brings a state-of-the-art technology infrastructure to dynamic pricing. Dynamic PriceBuilder brings high-speed performance tuned to deliver quotes via API in less than a second — as much as 10 times faster than typical direct-carrier API connections — making it scalable to support the volume of quoting and rating activity needs by the industry’s largest carriers, 3PLs and shippers.
One of the most common challenges for carriers is the sheer volume of quote requests processed each day. The growing number of requests puts pressure on the people and systems at the carrier to meet the demand for quotes. Everyone in the industry knows that time is money and the task of providing strategic, competitive rate quotes to each customer is often labor intensive.
Award-winning carrier Averitt is currently reaping the benefits of SMC³’s dynamic pricing solution with the launch of Dynamic PriceBuilder rebranded to Averitt ExactRate. The company played a key role in the design of the Dynamic PriceBuilder solution, according to Mark Davis, vice president of traffic and pricing at Averitt, giving carriers and their perspective a voice in the development of this technology.
“We helped build the prototype and test it and show what needs to happen and how it needs to work in an LTL environment from a rating and quoting standpoint,” Davis said. “This dynamic system will take into account what our projected costs are. I don’t know of anyone else that has taken it to this level of technology.”
Kent Williams, EVP of sales and marketing at Averitt, added, “We will continue to grow business organically through the services of our five verticals and will continue listening to our customers and developing solutions for them. We have no doubt that new products/services will be born as a result.”
SMC³ plays a large role in the industry, providing robust analytical tools and connectivity solutions that support full digitalization across the life cycle of a shipment. The company is looked to by carriers, shippers, 3PLs and technology providers for its reliable technology solutions and expertise.
“Virtually every internal process or task performed by pricing and traffic is done so through the use of one of SMC³’s products,” Davis said. “Without these tools, we would not be able to carry out the day-to-day business of our company.”
To learn more about SMC³, visit its website.
To learn more about Averitt ExactRate, visit its website.
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