Why More Shippers Are Considering Dynamic Freight Pricing

Modern businesses are deploying innovative freight pricing models to keep pace with the shipping and transportation industry’s natural volatility. Where most shippers once preferred the predictability of static contract rates over the cumbersome and even risky spot rate process, a more flexible model has recently gained a reputation as being equitable for shippers and service providers alike.

Let’s take a closer look at dynamic freight pricing, and why more carriers are trusting the model to bring in fair value for their services.

What Is Dynamic Freight Pricing?

With advanced forecasting tools and software growing more widely available, the logistics industry has acquired the ability to evaluate markets in real time — and to shift service pricing accordingly.

Dynamic freight pricing adjusts shipping rates based on evolving conditions, including available capacity, current fuel costs and even the latest weather forecasts. By routinely updating rates to reflect real-time data, logistics service providers gain an advantage over their static price-point counterparts by keeping service prices within the sweet spot of both sales and profitability.

Who Benefits From Dynamic Freight Pricing?

Dynamic freight pricing allows shippers to optimize delivery schedules around real-time capacity data and navigate elevated peak-season rates.

Carriers can achieve more efficient fleet and resource management by offering flexible prices in slow seasons to fill excess capacity, updating rates as demand surges to remain competitive.

3PLs often utilize dynamic pricing for cost savings and to improve service quality, segmenting rates and personalizing shipping solutions for their partners.

Reasons to Choose Dynamic Freight Pricing

First, dynamic pricing is designed to be cost-efficient. Shippers can benefit from lower rates when demand is at its weakest, while LSPs can charge higher rates when demand surges during busy seasons. This maintains a competitive balance for both parties while making the most of every load. Dynamic pricing also allows all parties to dictate higher rates for cargo requiring special equipment, endorsements or other unique requirements.

Dynamic freight pricing is data-driven, providing all the details necessary to make the right pricing decisions for your business in real-time. With the right software, an accurate rate quote takes mere seconds — an attractive feature for shippers and service providers alike.

Building more value into the customer relationship also allows logistics service providers to better customize prices based on the needs of their trusted shipping partners, as consistently accurate quotes for fair market rates tell shippers their business is being taken seriously.

Is Dynamic Freight Pricing for Everyone?

Dynamic pricing models may not be the right decision at every juncture. Pricing volatility can make budgeting difficult, and rates reflecting the industry’s dynamic conditions means it’s difficult to forecast shipping costs until it’s too late to make alternative plans.

Dynamic pricing also requires advanced software to support the necessary data analytics, which can be pricey and take time to learn before it can be fully utilized.

Most notably, part of this model’s demanding learning curve includes establishing parameters to keep transportation as consistent as possible while also embracing some measure of flexibility, as any inconsistencies in delivery speed and product pricing will directly impact customers.

Find out if dynamic pricing is right for your business and establish supply chain solutions designed to weather the ups and downs of the turbulent logistics market by contacting our team of experts today.