Shippers have a new way to book less-than-truckload freight and compare LTL truck rates — an online LTL spot rate marketplace launched by uShip and 16 asset-based LTL carriers.
The spot market gives LTL trucking companies a new way to reach smaller to midsize shippers and dynamically adjust non-contract pricing by lane, transit time and other factors.
“The advantage for the shipper is they can truly test the spot market and compare spot rates to contract rates,” said Jim Bramlett, general manager for LTL freight at uShip, in an interview at the SMC3 JumpStart 2014 conference in Atlanta Jan. 20. “The shipper has the option to use a published rate, spot rate, or go to the auction section of our marketplace,” he said.
The Austin, Texas-based company has lined up an impressive roster of LTL carriers to support the spot market, starting with R&L Carriers, ranked ninth among LTL trucking companies; Roadrunner Transportation Systems, No. 22 in JOC’s ranking of the Top 50 Trucking Companies; and regional carriers Averitt Express, Pitt Ohio and Midwest Motor Express. Other LTL carriers committed to the spot market include AMA Transportation, American West Transport, Atlas Motor Express, Benton Global, Daylight Transport, East/West, Frontline Freight, NTC, Pilot Freight Services, SHIFT Freight and Southwest Motor Transport.
The launch of uShip’s spot market underscores an increasing interest on the part of LTL carriers to look at new methods of pricing freight and dynamically adjusting rates to gain business.
The LTL spot market is a leap for uShip, which got its start in 2003 as an e-Bay-like online auction site that helped consumers post items they needed shipped and let carriers bid on freight. Founder Matt Chasen started the business to help everyday consumers find ways to move unwieldy items such as his mother’s armoire or cars more efficiently and cheaply.
Today uShip operates in 19 countries and has offices in Amsterdam as well as Austin. Although 95 percent of its business is still consumer-based, commercial freight is a fast growing business for uShip, which has more than 250,000 registered business shippers and 300,000 transportation service providers and is moving deeper into published rates, Bramlett said.
“We’ll be pushing published rates as often as possible across our platforms,” he said, noting that consumers increasingly choose “buy it now” options on auction sites over bidding. “We can give the shipper the options of a published rate, a spot rate or an auction bid. We have business shippers who like the auction, but published rates are absolutely our future.”
Here’s how the marketplace will work: When shippers post palletized freight on uShip.com, rates from carrier pricing engines are shown. Shippers evaluate those up-front rates and decide whether to book a carrier immediately or post to uShip’s open marketplace for more quotes.
Carriers using the system will be able to manage spot rates on a real-time basis, Bramlett said. They will also be able to determine whom they will do business with by setting business parameters, such as the type of customer (residential or commercial), the availability of forklifts, and freight type and restrictions. “They control the price, they control the service, so the pricing should be dynamic.” Carriers will be able to modify pricing by lane, time frame and even shipment in response to market conditions, rather than simply offering a discount off a one-size-fits-all published rate, Bramlett said.
“This is a very unique model,” he said. “Carriers are used to negotiating annual contracts or releasing an annual general tariff rate increase” for non-contract freight, he said. “Many carriers have lost touch with pricing for smaller shippers because the 3PLs control that.”
Carriers with sound costing and yield management programs will benefit from the program, optimizing their highest-yield profit segments, Bramlett said. The service will help carriers support existing 3PL contracts and gain “incremental” market share, he said.
But the biggest benefit for shippers, carriers and logistics providers may be knowledge gained about real-time market-based pricing conditions and costs.