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The term dynamic pricing is nothing new in the less-than-truckload (LTL) industry, but one carrier has created a new tool that diverts from the traditional meaning.
Cookeville, Tennessee-based Averitt Express (CCJ Top 250, No. 22) recently went live with its ExactRate dynamic pricing engine, following three to four years of development in conjunction with the Averitt IT and pricing team and LTL technology solutions provider SMC3.
The tool instantaneously generates a 100% cost-based price that reflects market dynamics, and it has expanded Averitt’s ability to garner more business, said Director of Pricing Mike Sanders.
“Dynamic pricing is a term that's been kicked around for at least 15, 20 years. But historically, dynamic pricing programs are really just an array of discounts off of an old traditional freight class and rate tariff construct, and the carriers adjust the discounts up or down to encourage more aggressive pricing where they have need to fill capacity. It's dynamic in that it changes and carriers alter it periodically based on need, but it's still really just using the same freight class and rate tariff construct that the industry has been using for 100 years,” Sanders said. “We’re returning an individual quote for each individual shipment based on its own characteristics, whereas historically what the industry has done is juggled discounts and flat charges based on averages or an aggregate of what a customer's business represents. This is much more surgical.”
ExactRate is not based on any rate tariff. It generates a single net charge for the shipment plus line-item charges for any applicable accessorials. Shippers’ freight audit and payment processes must allow for a net, dynamic rate (no tariff/discount breakdown, no line-item fuel surcharge).
ExactRate evaluates Averitt’s estimated costs and real-time demand to provide accurate and serviceable rates that align with market conditions and accurately reflect operational costs.
