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by Jared Spude
Jared Spude

5 min read

Why Shippers Need A Better Rate Negotiation Tool

December 4, 2023

Jared Spude
by Jared Spude

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Today’s soft freight market provides shippers the opportunity to take a step back and rethink their transportation strategies. Many shippers have reaffirmed that establishing strong partnerships with carriers isn’t just a smart move — it’s a necessity. But unlocking these mutually beneficial relationships hinges on transparency in the negotiation process.

To achieve transparency in rate negotiations, shippers need access to real-time data on transacted transportation network rates, which can help them benchmark more efficiently. With actionable benchmarking data to level set expectations and pricing, negotiations can lead to mutually beneficial outcomes.

However, without this data-enabled transparency, it’s difficult for shippers and carriers to establish fair and competitive pricing agreements that reflect current market conditions. This forces them to negotiate rates based on promises, often leading to suboptimal outcomes for both parties.

The high cost of negotiating without quality data

Most transportation benchmarking solutions on the market offer mass aggregate data that includes shipper, carrier, broker, and pay rates. But more data isn’t always better, especially when it lacks the relevance or context to provide actionable insights. Shippers who lack visibility into transacted linehaul rates and market pricing subsequently lack leverage in carrier contract and rate negotiations. Without this relevant and timely data, it’s nearly impossible for shippers to benchmark their freight procurement practices against their peers.

A lack of transparency and high-quality data during rate negotiations places both shippers and carriers at risk of passing up mutually beneficial relationships. For example, shippers and carriers often dissolve partnerships due to unfavorable rates, which means rates that are either too high or too low can lead to future service disruptions. Quality data on fair pricing can help keep both sides at the negotiating table.

So how can you effectively navigate negotiations while keeping transparency and long-term strategy in mind? That’s where Capac-ID comes into play.

How to leverage Capac-ID as a rate negotiation tool

Capac-ID is Breakthrough’s comprehensive productivity platform that provides access to lane-level network data in real time. By benchmarking your freight network against the wider transportation ecosystem, you can identify fair-market linehaul rates, streamline carrier selection by lane, and uncover specific opportunities.

Here’s a glimpse into the opportunities you can unlock with Capac-ID:

  • Leverage benchmarks based on transacted rates. Capac-ID provides access to real-time, transacted linehaul rates so you can enter negotiations with a better grasp of freight market trends and pricing. While most industry solutions provide static linehaul rates based on the supply of capacity, Capac-ID is fueled by the fluctuating demand for capacity so your benchmarking reflects current contract rates.

This level of precision in your benchmarking enables you to engage in more productive conversations with carriers and set expectations upfront, which promotes transparency and long-term growth in these relationships. An added bonus? The third-party data that informs Capac-ID is objective and unbiased, so you and your carrier partners can feel confident in your agreed upon rates.

  • Engage in data-driven conversations. Accurate transportation network data is crucial in identifying areas for improvement in your network. Capac-ID pinpoints areas of your operations that incur costs above or below your peers, empowering you to engage in meaningful conversations with carrier partners. For instance, if you identify a specific lane for which you are paying more than the industry benchmark, you can ask your carrier for more information about the factors driving the higher linehaul rate.

This may result in a renegotiation that works in both parties’ favors. Or maybe you and your carrier partner pinpoint an internal inefficiency — like long dwell times — that’s incurring the higher rate. In this instance, you can work together to find a solution to streamline operations. And if you can’t come to an agreement, you still have the information you need to explore other carrier options or make lane-level adjustments.

Likewise, if you identify a specific lane for which you are paying less than the industry benchmark, you can consider awarding the carrier with more shipment volume. Data-driven insights are essential to a strategic and sustainable relationship.

  • Optimize every lane. You need to account for the unique needs of every lane in your routing guide, from a shipment’s required equipment type to its mode. Capac-ID offers a view of carriers’ capabilities by lane, which features divisions, modes, and more.

The result? You can leverage lane-level benchmarking and identify optimal carriers for every lane — and achieve seemingly minor efficiency gains that add up to significant improvements over time.

Modernize carrier selection and negotiations with Capac-ID

Traditional methods of selecting carriers through notices on load boards and full network RFPs no longer suffice in today’s increasingly complex transportation landscape. With access to granular network data through Capac-ID, you can lean on transacted linehaul rate data to ensure you always secure the best rates and identify carriers by lane that support your long-term strategy, strengthening relationships along the way. Moving forward, you can negotiate (and renegotiate) your carrier contracts and rates with confidence, supported by real-time data specific to your network.

Schedule a demo of Capac-ID to discover how you can pinpoint optimal carrier partners and determine accurate linehaul rates across your transportation network.

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