Think about the last time you went online to buy tickets to a baseball game or to see your favorite artist in concert. One moment, the tickets are $70. Dozens of fees and a mountain of service charges later, your ticket is now more than $100. So frustrating!
In this scenario, opaque pricing doesn’t help anyone. Customers become irritated and might even throw their hands up and abandon their carts altogether. The ticket seller doesn’t benefit either, as customer trust is eroded, and possibly, the sale is abandoned.
The same is true whether we’re discussing a sporting event or the freight market. Price obfuscation in the logistics industry is detrimental not only to shippers but also to carriers and other partners. Instead, transparent pricing is key to ensuring shippers, carriers, brokers, and 3PLs understand the full cost of a service, and that everyone is on the same page when pricing a service.
Defining Price Obfuscation in the Freight Market
While price obfuscation may sound like complicated industry jargon, broadly speaking, it’s the practice of hiding true pricing information. It’s giving a customer a price, rather than the price.
In the freight market, this can come in a variety of forms. The seller or service provider could have complex fee structures or hidden surcharges listed in tiny fine print at the bottom of a contract. They might use inaccurate or delayed pricing data that doesn’t reflect the most current market rates.
Today’s freight landscape can be volatile and ever-changing, so carriers must provide shippers with the most accurate and up-to-date pricing data. For example, delays at the Panama Canal or reroutings to avoid the Red Sea and Suez Canal could ultimately affect the most current pricing for ocean shipping or intermodal transport. Ebbs and flows in the availability of dry vans on the spot market can quickly alter the market and change pricing to match supply and demand.
Price obfuscation is likely due to a combination of factors – some may be intentional and some not. While players in the market may take advantage of the resulting opaque nature of lane pricing, everyone suffers its effects, from shippers to receivers, at every step along the supply chain.
Logistics Professionals Pay a Steep Cost for Price Obfuscation
Shippers certainly pay a price—sometimes literally—for a lack of transparent pricing. Without accurate and unclouded pricing information, manufacturers could struggle to plan their supply chain operations effectively, harming the overall decision-making process at an organization.
However, the shipper is not the only victim of price obfuscation. The lack of pricing transparency throughout the supply chain can create misunderstandings, inefficiencies, and strained relationships.
Brokers and 3PLs may face challenges negotiating accurate and fair deals for their shipper clients. This could mean going back and forth between various parties on pricing, contributing to inefficiency. Brokers may not be sought after as a transportation provider of choice if they continuously obscure the full pricing of a lane. This practice has far-reaching implications for the entire freight market. Greater opacity with pricing only exacerbates risk and makes freight transactions less reliable. It leads to a rollercoaster in pricing, where the whole industry becomes more variable, volatile, and less predictable.
The steepest cost of all is the erosion of trust. Shippers may start to approach contracts and negotiations with a greater degree of skepticism. Brokers, 3PLs, and carriers then face the arduous task of rebuilding trust and business relationships to secure business.
In a Volatile Logistics Landscape, Price Transparency is Key
Having transparent pricing benefits all stakeholders. The practice helps to mitigate many of the issues mentioned above, such as volatility and distrust. It could encourage parties within the supply chain to collaborate, increasing efficiency across the board. With all the cards shown for pricing, shippers and carriers can make better decisions and improve risk management.
With the volatile market, however, a full and accurate picture of pricing may be easier said than done. Companies such as Farelanes are making it their mission to provide up-to-date, transparent information on freight costs to ensure the smoothest supply chain operations possible. Farelanes’ approach to demystifying pricing in the freight market is three-fold:
1. Real-Time Data Transparency
Real-time data is the best way for brokers and 3PLs to get an accurate picture of the market and quote the most realistic rates for transport.
Many traditional methods use estimated or aggregated data sources to create the best guess at a price. However, the downside of this practice is that it’s not always accurate when something in the market changes. Maybe a natural disaster strikes that changes capacity in certain freight markets, or a geopolitical conflict disrupts trade flows. Estimated or aggregated data won’t reflect the latest news and can lead to price obfuscation, even if it’s unintentional.
That’s why Farelanes doesn’t guess on something as critical as pricing. Rather, we use actual invoices to create transparent data. Farelanes gathers, hygienes, analyzes, and anonymizes lane data to develop precise and real-time freight pricing.
2. Data Cleansing and Validation
Data forms the foundation of any great service – but only if that master data is accurate and error-free.
Farelanes meticulously cleanses and validates all the lane data we collect. Doing so mitigates the risk of price obfuscation caused by inaccurate pricing information, ensuring our clients have access to the most reliable and trustworthy data.
Our commitment to data cleansing and validation enhances decision-making and fosters trust among all stakeholders in the freight industry.
3. Client Education and Empowerment
Knowledge is power. We believe that the more shippers, carriers, brokers, and 3PLs know about lane data and freight market pricing, the better equipped they are to navigate this complex industry.
Clients who use Farelanes’ Bulk Data Publishing service or the myfarelanes.com web applications gain access to real-time lane rates and market trends. This gives shippers transparent pricing data and allows them to make informed decisions when requesting a quote or contracting with a broker or transportation provider. The more shippers know, the less likely they’ll fall victim to price obfuscation.
Working With a Data Company for the Clearest Pricing Picture
Just as no one wants to discover the fees for Taylor Swift concert tickets are just as high as the tickets themselves, no one in the freight industry wants to contend with hidden fees and surcharges.
Using complex cost structures and price obfuscation can damage relationships and erode trust across the logistics industry. On the flip side, transparency in pricing benefits shippers, carriers, brokers, and everyone in between.
This is where Farelanes comes in. Farelanes is at the forefront of transforming the freight industry. We offer an innovative suite of products designed to revolutionize lane pricing in the spot market.
We have a different idea. We stand out by gathering, analyzing, and anonymizing lane data sourced from banks and factoring companies, and hygiene this data to provide a valuable solution for industry players seeking accurate and timely lane pricing.
But we don’t stop there. More than just offering transparent pricing is needed. We offer real, transparent pricing in real-time, not after the fact.
A lot of other companies claim to offer transparent pricing. We actually do it.
Farelanes is committed to transparent pricing. We believe price search friction is bad for business, and everyone benefits when they know the price, not a price. That’s why we offer a variety of lane pricing data to meet your specific needs:
- Silver: Unlimited line haul rates for city fair, up to three favorite lanes, and up to 27 trailer types. Farelanes Silver gets you the information you need to know, when you need it.
- Gold: When you need more, upgrade to Farelanes Gold…everything silver offers, plus export level II detail, lead times, fuel surcharges, and much more.
- Bulk Data Publishing: If you already run your own backend data system, our Bulk Data Publishing allows you to plug our feeds directly into your system, giving you unlimited favorite lanes, charts and graphs, miles, export data, and much more, via a flexible API that can adapt to whatever you’re running now.
Get in touch today to discuss which service is right for you and how, together, we can remove price obfuscation from the freight industry.
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