Artificial Intelligence (AI) is no longer a flashy term thrown around without merit. Rather, industries across the board are broadening use of technology applications to improve industry standards and drive greater efficiency.
Over centuries of operating supply chains, humans improved operations to the point where shipments could be completed in less than 24 hours. But with technology entering the picture only a few decades ago, and quickly advancing to the point of surpassing human intelligence, it’s time to investigate specific areas across the industry where technology can further enhance operations, simplify and automate tasks, boost safety measures and, ultimately, improve bottom lines. Enter AI.
AI enables machines to mimic human processes, all while doing it better. In the supply chain, that could mean automating back-office tasks, enabling self-driving trucks or helping with warehouse inventory tracking. But perhaps the most overlooked area for fleets is helping them navigate the ebbs and flows of the spot market.
The state of the spot market
Spot market rates are directly impacted by supply and demand. If demand for a product is high and supply is low, spot market rates go up. If the demand for a product is low and supply is high, spot market rates go down. Factor in the number of trucks and available drivers on the road at any given time and spot market rates can really fluctuate. After the last couple of years of high demand and many shipments to move, which caused prices to remain high, the tides are shifting again.
While global shipping has slowed over the last few months due to inflation, the spot market has tempered ever so slightly. Full truckload rates have declined over the last couple months, but the LTL sector has yet to see that trend translate. The reason prices haven’t receded as much and as quickly as the industry might normally expect is that inflation is also impacting fuel prices, a key factor that also goes into determining prices.
So, while shipments might have slowed, fuel prices are on the rise again, helping prices remain steady. However, industry experts don’t expect that to last and are preparing for rates to drop significantly in Q4 and into Q1 2023 as trade continues to slow.
Where AI benefits fleets
AI systems aim to provide the most accurate and up-to-date rates possible that will maximize long-term profits while also considering the current market conditions. With the market changing so much on a day-to-day basis it can be hard to keep up, especially if your fleet is still doing everything manually. Imagine the time it would take to review all the available loads and what is being shipped, factor in fuel prices, narrow down any jobs that fit certain parameters, see if you have the equipment to handle the job, and work with the shipper to coordinate the delivery details.
With technology, that can all be automated in just a few clicks. AI takes into account what sort of loads your fleet handles, narrows them down by what fits those parameters, and can provide insight into which one would be best – all while giving you the best price.
By implementing AI-based pricing software into one’s tech stack, it can constantly monitor the market and adjust prices in real-time based on changing conditions. This allows fleets to be more agile and responsive to market changes, and have insight into how to properly negotiate spot contracts according to current market conditions, leading to increased profits.
More importantly, by leveraging data and analytics fleets can better use that information to negotiate better rates – ultimately boosting their bottom lines. The automated technology also frees up employees to focus on more mission-critical tasks that require a more human element, like interacting with customers and partners, which also can improve the business in other ways.
AI opens the door for fleets to improve their business and win the spot market.