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February 3 2020

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60 The Journal of Commerce | Februar y 3 2020 Surface Transportation DAT SOLUTIONS IS using predictive analytics technology to sift through more than $68 billion in annual spot and contract transactions to give car- go owners a better sense of what they could be paying for trucking over the next 12 months, as supply chain visi- bility shifts its gaze to the future. In the trucking market, knowing what rates are available today is no longer enough. Shippers increasingly want to know what a shipment will cost next week, next month, or even 12 months from now, and predictive analytics technology is helping them get a better forward view. DAT Solutions and Knight-Swift Transportation Holdings in early January announced a pilot test of a rate forecasting tool that will draw on historical pricing data from its DAT RateView database. The tool, DAT says, will provide forecasts for multi- ple types of users, including shippers. "We've all seen the pace of change and volatility in the [truck- ing] industry creep up in the last 36 months," said Ken Adamo, DAT's chief of analytics. "How can we get better forward-looking projections using historical rate data, time of week and month, and seasonal data?" Rate forecasts will become increasingly important during annual contract negotiations and bidding events, as truckers, brokers, and shippers try to determine how the market will unfold. "You can tie a lot of this to the new wave in data science," Adamo said. The technology needed to crunch very large amounts of data and also drill down to highly specific data sets is advancing. Forecasting is based on "tried and true statistical techniques," Adamo said. "What was prohibitive in the past is that it took so long to do." Portland, Oregon-based DAT will offer forecasts of varying lengths that are adapted for specific types of customers, he said, including truck- ing companies, third-party logistics companies, and shippers. "As we gain mass, we'll be able to gener- ate more granular lane forecasts," Adamo said. Contracting changes DAT is entering an active market for truck rate forecasting. Rival load board operator, in partnership with FTR, offers a lane-by-lane rate forecasting tool. Coyote Logistics provides a more generalized market forecast through its Coyote Curve. Predictive analytics — and rate forecasts, in particular — could have a significant effect on how shippers procure transportation services and contract truckers. "If you're a shipper, a 12-month weekly forecast would help you put out target rates for potential carriers," Adamo said. Theoretically, more accurate "target rates" could help shippers and carriers determine ranges of pricing that could be included in contracts to trigger an increase or decrease in contract rates without reopening an agreement or pushing a shipper or carrier into the spot market. When it comes to forecasts, though, shippers are looking beyond rates. "Predictive capacity" became a buzzword after truck capacity tightened in 2017 and 2018. What shippers and carriers really want is clearer supply chain visibility and less market uncertainty. "In trucking, you've got an end- less cycle," Adamo said. "When rates are high, people buy a lot of trucks, and then rates go into the gutter. Being out in front of that will set businesses apart in the new decade." As technology evolves, "they will respond so much faster to changes." The size and scope of Knight- Swift's operations as the largest trucking carrier in the US will help DAT "test out" the forecasting tool, Adamo said. DAT expects to release the application to the market in the second quarter. The rate forecasting capabilities will help generate other reports and services, as well, he said. "Historical prices are the best indicator of future prices," Adamo said. "Working with Knight-Swift, we can keep on refining our algo- rithms by working on real-world problems." DAT plans to test its forecasting tools with third-party logistics providers and shippers, as well. JOC email: twitter: @willbcassidy Extended forecast DAT brings $68 billion in data to trucking rate projections By William B. Cassidy DAT and Knight-Swi are piloting a new rate forecasting tool that draws on historical pricing data from DAT's RateView database. "Historical prices are the best indicator of future prices."

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