It’s rare to find a situation in business where there is a true win for all parties involved, so when it happens, it’s worth sharing and celebrating. Dynamic pricing has long held the promise of selling pallet spaces on LTL trucks as airlines sell individual seats. The theory is solid, but practically speaking, true dynamic pricing that fluctuates up or down can be terrifying to shippers and 3PLs that will have no certainty to budget expenses for the year. Banyan took the concept and created Intelligent Pricing, a tool that unlocks practical, win-win solutions for both the carriers and the shippers.
How Intelligent Pricing Works
Intelligent Pricing enables carriers to instantly offer pricing incentives on top of the discounts that are already contracted to shippers or 3PLs. LTL carriers are embracing the new technology to better correct lane imbalances, test pricing, adjust for seasonality, expand new geographies, and have the agility to adjust pricing as their networks change.
For shippers, the pricing only adjusts lower from their negotiated contracts, which continue to serve as a cap pricing that will not be exceeded. Shippers and 3PLs see the spot-quoted lane specials flowing seamlessly into their own TMS systems and don’t have to change processes to take advantage of the carriers’ incentives.
Ultimately, Banyan’s patent-pending model creates natural savings through better information and agility for logistics partners to instantly respond to network and market changes.
The Proof: Real Dollars in Real Time
At the time of this writing, Banyan has secured 12 of the top 15 LTL carriers as Intelligent Pricing users and will be adding many more over the next few months.
One national LTL carrier has already secured $1.5 million in new freight in a little more than 30 days. On that carrier alone, Banyan’s clients have received more than 7.18 percent savings on top of their negotiated discounts, for a total savings of over $392,000.
Any company can write to their carriers’ APIs and get the pricing they negotiated, but only Banyan delivers the API that generates an ROI for its partners and users. Since its introduction to the market, the discounts have averaged $13.36 per shipment.
What does this mean for your operation?
While Banyan’s dynamic pricing technology is new, the financial impacts are very real. Deploying Intelligent Pricing delivers an instant advantage over your competitors who are only getting their standard rates from carriers. This means you’re shipping products cheaper than your competitors and increasing your profit margins, delivering a competitive edge you can’t get anywhere else.
The Origins Of Intelligent Pricing
Around 2005, Banyan was already enabling clients to renegotiate their LTL carrier rates monthly through simple feedback loops with carriers on missed opportunities. API technology gave rise to new strategies for clients to essentially renegotiate their rates every month by sharing more information with their carriers. The carriers were able to self-select lane discounts where their networks were strong, and because we gave the transit times and the awarded rate, they could make informed decisions to update lane-specific pricing where it was beneficial for their business.
The relationship between clients and carriers changed to be collaborative on a regular basis as the client’s customer network changed, as well as the carriers. The savings realized by our clients were typically in the double digits, and their yield was up with the carriers because each carrier was leveraging their strengths. Static tables, averaged tariffs and annual bid processes are horrifically assumptive and costly. Traditional tactics are similar to doing brain surgery with mittens and a shovel. Instead, the agility of APIs and regular conversations with carriers is laser-like precision. For the carriers, however, it remained reactive rather than proactive.
The first sparks of innovation came in 2012 when we asked ourselves, what if we could enable the carriers to offer discounts in real-time with the feedback they are getting from their internal systems? That question jumpstarted the design for dynamic pricing, but carriers at the time were still skeptical of embracing APIs. As such, we shelved the project and focused on building more connections.
In 2017, the time seemed right. Our team really started to plan the product offering for the carriers’ yield managers to access and map out the integration points and options to push data directly to the carriers billing systems. We ran pilots with several beta carriers and quietly filed for a patent. APIs were exploding with adoption, and the carriers now understand the power of the solutions.
Intelligent Pricing is just launching now to the market at large, and the adoption rate is tremendous. There’s more work ahead and more tools to build, but this is an exciting time to be in LTL technology.
What’s Next for the Industry
Transportation management capabilities and solutions are growing aggressively and opening doors to shippers that don’t have the leverage today to negotiate directly with LTL carriers and work into a truly dynamic tariff. There are innovative 3PLs and TMS systems already adopting dynamic pricing technology, and progressive carriers that are opening new opportunities to engage creatively with their customers.
If you’re looking to improve your own operations, keep an eye out for some more incredible innovations from Banyan Technology and the next win for everyone.
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ABOUT BANYAN TECHNOLOGY
Headquartered in Cleveland, Ohio, Banyan Technology is North America’s leading provider of live carrier and API connectivity for transportation management. With over 2,000 TL, LTL, Local and Parcel carrier connections and 34,000 client locations accessing the application, Banyan Technology provides commercial shippers, brokers, and 3PLs with unparalleled access to carrier data. These connections boost efficiency, improve visibility and deliver permanent reductions in shipping costs.