Freight rate suggestions. How to efficiently estimate the price?

- Author: Małgorzata Sokołowska

Freight rate suggestions. How to efficiently estimate the price - logo

Price suggestion while adding a freight offer allows you to save time and assess the value of the transport on the contractor’s side. The forecasted price is calculated using machine learning algorithms based on data from similar offers. How to use it in your daily work?

Price estimation makes work easier and faster  

The forecasted price is used in various online shopping platforms. You may have come across it when placing your product offer on an advertising or auction site. For example, at the stage of setting the selling price, the system suggests a market value, i.e. the probable rate at which similar products are sold. On the other hand, a comparable mechanism is used by applications such as Uber, where the client is informed of the fare at the start and makes a decision whether to use the service. How does it work on the Platform?

How does the forecasted price work on the Platform?

The purpose of the forecasted price is to help calculate the rate in a situation where the orderer does not have a good knowledge of the market and the current prices. This function is designed to save time and increase awareness of market prices – it constitutes a reference point. The forecasted price appears to the orderer when creating a new freight offer. He can take it into account or not. He may also choose not to define a price per freight and follow a strategy of price negotiation with the carrier, which is now possible even in the messenger window.

Use of artificial intelligence

To estimate the forecasted price, the ‘machine learning’ algorithms analysing many different parameters simultaneously, are used. They search for freight prices that have been accepted based on similar values: direction, route, vehicle characteristics, as well as current fuel prices, day of the week, season or time of the year. All these factors are time-varying, so the algorithms work all the time, while learning and improving their model of work. 

Reference point for the orderer

The forecasted price is a useful tool that supports the daily work of the forwarder or shipper. It is particularly valuable when it is difficult for us to estimate the proposed rate – we do not know the market, we do not constantly monitor rates, or we are looking for a carrier on a completely new route. This is a useful hint that can be taken into account or used for illustrative purposes. The Platform has a number of tools that support both sides of the transaction in setting the price as well as negotiations. It is up to the user to decide which of these will be applied in his daily work to make it faster and more efficient.