Executive Briefings

Benchmarking in a Dynamic Truckload Market

Shippers are showing a strong and growing interest in benchmarking rates for truckload services, according to Ben Cubitt, senior vice president of engineering and consulting with Transplace. "They really see the value," he says. "It helps them to look at their network and see where the opportunities are." They can determine which lanes are operating at or below market levels, and where they should be looking for additional carriers, exploring capacity and determining the areas that are ripe for savings.

Benchmarking freight rates in a competitive, fast-changing environment can be challenging. An exclusive reliance on historical rates "can give you a bad view of the market," says Cubitt. To address the problem, Transplace draws on multiple sources of market data, for spot as well as contract rates. Both areas must be taken into consideration, he stresses.

The key is to be on top of current developments to the greatest extent possible, although no shipper can keep up with all of the changes that are occurring on a daily, weekly and monthly basis. Nevertheless, says Cubitt, "historical is a good starting point."

No single answer will meet the needs of all shippers in a given lane.  An "aggressive" rate evaluation suits those that have substantial amounts of freight in that lane, along with access to a good mix of carriers. For shippers with less freight to offer and multiple stops, their business might be less desirable to carriers and therefore pegged closer to the market rate.

Truckload markets continue to change. Cubitt sees a trend toward the use of annual or periodic bids by large and medium-sized shippers. When the market was at its lowest level, shippers had a wide range of carriers from which to choose. More recently, he says, they have sacrificed some savings in order to reward core carriers. Other shippers, however, assume wrongly that carriers have returned to profitability and are therefore able to accept rock-bottom rates.

To view video in its entirety, click here

Shippers are showing a strong and growing interest in benchmarking rates for truckload services, according to Ben Cubitt, senior vice president of engineering and consulting with Transplace. "They really see the value," he says. "It helps them to look at their network and see where the opportunities are." They can determine which lanes are operating at or below market levels, and where they should be looking for additional carriers, exploring capacity and determining the areas that are ripe for savings.

Benchmarking freight rates in a competitive, fast-changing environment can be challenging. An exclusive reliance on historical rates "can give you a bad view of the market," says Cubitt. To address the problem, Transplace draws on multiple sources of market data, for spot as well as contract rates. Both areas must be taken into consideration, he stresses.

The key is to be on top of current developments to the greatest extent possible, although no shipper can keep up with all of the changes that are occurring on a daily, weekly and monthly basis. Nevertheless, says Cubitt, "historical is a good starting point."

No single answer will meet the needs of all shippers in a given lane.  An "aggressive" rate evaluation suits those that have substantial amounts of freight in that lane, along with access to a good mix of carriers. For shippers with less freight to offer and multiple stops, their business might be less desirable to carriers and therefore pegged closer to the market rate.

Truckload markets continue to change. Cubitt sees a trend toward the use of annual or periodic bids by large and medium-sized shippers. When the market was at its lowest level, shippers had a wide range of carriers from which to choose. More recently, he says, they have sacrificed some savings in order to reward core carriers. Other shippers, however, assume wrongly that carriers have returned to profitability and are therefore able to accept rock-bottom rates.

To view video in its entirety, click here