Logistics is a fast-paced and always-changing industry. Understanding market dynamics is crucial for staying ahead. Artificial intelligence (AI), in all its forms, is all the rage. Now, logistics professionals can harness the power of AI plus other advanced data solutions and pair it with their existing analytics capability to unlock value and optimize efficiency in the freight industry.
The freight cycle
Market fluctuations directly affect freight capacity and rates. As volumes decrease, capacity loosens, resulting in lower rates. Conversely, when volumes rise or capacity exits the market, rates rebound. Understanding this cycle is key to making informed decisions. Every conversation and negotiation within logistics must begin with an understanding of where we are in the freight cycle. At the time of writing, we’re in a deflationary cycle.
Good data fosters efficiency
A proper analytics setup fueled by good data reveals indicators such as lane-level efficiencies, market types, lane economics, optionality, volatility, and seasonality. This information helps brokers create rates that protect their margins and bring more money home. Consider this breakdown of rate construction:
Good data will also help you identify:
You’ll identify major markets with lots of trucks and loads but lower rates, mid-major markets with regional capacity and middle rates, and non-major markets with higher rates and fewer loads.
Trends across market types
Analytics will show you the nuances of lane economics, optionality, volatility, and seasonality in different market scenarios.
The power of AI
AI is a game-changer, but the importance of good inputs cannot be overstated. Data serves as the foundation for every model. Emphasizing that good data with a simple model surpasses incomplete data with an advanced model, the blog stresses the need to focus on the quality of data feeding into AI systems.
DAT has utilized machine learning in tools like Ratecast. Here’s DAT Director of Analytics, Alex Perry, on Ratecast:
“We also have a product at DAT that’s been around for about five years now called Ratecast. It is a machine-learning forecast that takes RateView rates over the past five years as well as some other exogenous variables and predicts where we would expect the RateView rate to fall on a specific day in the future – either in the short term, the next 35 days, or the long term, next 365 days.”
How DAT helps brokers
DAT iQ leverages over $150 billion in annual transaction data and provides brokers with a comprehensive view of the market. With insights into capacity, performance against the market, and carrier network status, DAT empowers informed and strategic decision-making.
Leveraging data analytics, particularly in conjunction with AI, helps navigate market fluctuations, optimize efficiency, and unlock value in the dynamic world of logistics. If you’re curious about how analytics can transform your business, click here. If you’d like to hear an in-depth discussion of how AI is changing logistics, click here.
Click here to see DAT experts discuss how a data-centric mindset can unlock hidden value in your brokerage.