For obvious reasons, freight pricing is one of the most critical parts of the entire transportation process; it’s how everything starts. The industry has been pricing freight the same way for decades because it has been “working well” or “good enough,” and this is why the adoption of technology or applications that provide pricing has been slow.
Companies are finding it hard to trust these types of platforms since in many cases, they do not provide what they sell, and they are left having to go back to traditional and time-consuming methods.
Here’s where companies within the industry must reach out of their comfort zones, which are traditional pricing methods, to provide competitiveness for their customers through effective and trustworthy software. “Good enough” will not cut it anymore. With customer demands and expectations increasing, companies within the industry must find ways to provide the service levels and customer care they require through efficient processes and technology implementation.
Traditional Pricing Methods
Traditionally, freight pricing was a conversation. A shipper needed to ship their freight, they would call two or three of their known carriers, send an email with the information about the shipment, receive a quote, choose the most competitive one, and the transportation process would begin.
This is still the best way to handle freight rates for some, but it doesn’t mean it’s the most efficient or cost-effective way. Freight pricing has evolved to allow companies to access competitive freight rates according to their specific needs. Here’s where these three traditional freight pricing methods emerged:
Contract Pricing
Contract Pricing refers to an assured freight rate for a specific lane, period, and volume. Usually, these are annual contracts negotiated between shippers and carriers.
Spot Rate Pricing
Spot rate pricing is the most common as it refers to negotiated pricing when a shipper needs to move specific freight. In this type of pricing, rates are based on market dynamics, demand, and supply.
Project Pricing
This type of pricing is related to special projects, which refer to shipments that are over-dimensional or outside of the “normal” quantity.
These are still the most common freight rate pricing methods, but now more than ever, companies are searching for alternatives that ensure their freight is delivered when required and at a fair price.
Freight Pricing Digitalization
Even though freight rates continue to be challenging due to their complexities and volatile nature, through digitalizing the process, companies can shorten the time gap, use data, and improve their service levels.
Thanks to software implementation and visibility, companies can sift through their historical data on specific lanes and know exactly what price they should pay without hesitation. This allows them to choose the most competitive rates for each shipment.
By using new software and freight pricing apps, you’ll be able to respond to the market quicker, thus providing added value and higher-quality services.
At Logistics Group International, we’ve partnered with leading industry technology companies to continue providing our customers with the highest quality services, including real-time trucking spot market rates. Technology implementation makes the freight pricing process even more seamless to ensure your freight is delivered safely and on time.
