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Reinventing Contractual Freight: introducing a real-time, guaranteed rate for routing guides, resulting in a 20% increase in load coverage

Convoy NewsPublished on July 31, 2018

We consistently hear from shippers that the contractual freight process is failing them. It’s a slow and static process that is misaligned with the fast-paced and volatile freight market. Today, we are announcing Dynamic Backup giving shippers real-time, guaranteed prices for contractual freight. This provides shippers with reduced operational overhead, increased load coverage and cost savings on shipping.

Market conditions are dynamic, but routing guides are static

A typical routing guide works like this. Shippers offer the job to the primary carrier at a pre-negotiated price. This price is usually set during the annual freight RFP. When the primary carrier rejects the load, the shippers start going through their routing guide giving each backup carrier two hours to accept or reject the load.

When the primary rate is lower than prevailing market prices, carriers start rejecting more loads. As loads make their way through the routing guide, each rejection means valuable time lost in securing the right truck. With less time available to find a truck, prices increase and the possibility of a service failure looms.

This problem is magnified in current market conditions as it is one of the most volatile freight periods in history. In June, as much as 27% of contractual freight was being rejected per FreightWaves’ outbound tender reject index.

Reinventing contractual freight

With Dynamic Backup, we insert a real-time and guaranteed market rate into the routing guide that is instantly bookable. Dynamic Backup does this by building on two of Convoy’s established technologies:

  1. Real-time pricing data models to determine the current market price
  2. Relevance models to find the best available truck for the job

Dynamic Backup is live with some of the largest shippers in the United States. By adopting this new backup strategy, shippers have seen:

    1. Increased operational efficiency. Load planners spend less time trying to get last minute, urgent loads covered in spot through auction, email and phone calls.
    2. Increased shipment SLA. With better load coverage, shippers see fewer service failures and increased on-time delivery.
    3. Savings on freight costs. With a truly guaranteed rate in the routing guide, shippers see increased coverage and avoid the spot market.

At Convoy, we are committed to solving real customer problems through the use of technology. We are always looking for innovative partners. Contact us if you’re interested in reinventing your contractual freight with Dynamic Backup.


Brooks McMahon

Brooks McMahon is Vice President of Partnerships at Convoy, where he and his team are responsible for developing and growing strategic partnerships. Previously, Brooks served in a variety of senior management roles at companies including Marchex and Getty Images. Brooks earned an MBA from the University of Washington and a BS from Santa Clara University.
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