How to Measure the Market During Uncertain Times
In this episode, Aborn President, Jill Clifford, chats with Steve Aborn, Director at Aborn & Co., about how to measure the market during uncertain times. In this conversation they discuss:
- Data principals needed to react to uncertainty
- Policy and procedures to react fast
- What the future might look like
The following is a condensed transcript of the interview:
What are we seeing in the market? And why?
As the pandemic hit we have seen a lot of unpredictability and variability in the market. Large brokers are chasing freight. Brokers are struggling financially and in trying to figure out the market. The rates have been everywhere in both directions. From our perspective, there are a lot of variabilities and everything is changing so much it is hard to give solid advice as the market changes weekly.
How do we review the bids? What is the process and what do we give feedback to our operations people?
The negotiations have to move fast because the market is moving so fast. A lot of it is done systematically through databases. We put a bid out and adjust the information we get back then go through the process of score carding. We start with an initial bid then weed out people that probably don't make sense for the business. We get focused on the right carriers and work with them to get the capacity. Systems and data processing is very important. The distribution of pricing is everywhere and that is where a lot of people are running into trouble.
How does the score carding work?
Part of the reason data analysis is so important is that it helps to keep you from going through each price point and instead you can look at the data as a whole. When we look at a distribution of bids we try to tease out outliers. Such as which prices do not look like other prices so then you can contact the brokers and ask about them.
How do we see the next 12 months playing out?
We don’t see our yearly plans say from June-June, working out through the next year. Although we may try, these plans are going to need constant updating strictly because of the pandemic. We think what this pandemic has done to the industry is created more dynamic pricing. Not necessarily living in spot but working with your primary carriers in more dynamic pricing. Getting our clients informed on what is going on will be one of the most important things for us going forward. We need to focus on negotiating and measure the upcoming rates and how we are going to tell that story of the change in rates.
As an operator what is your message to shippers as these rates change and clients are unhappy?
It is going to be carriers discussing and negotiating what they need and when. It is getting into that real dynamic discussion. When you put all the risk on the carrier their rates are going to go up. The brokers who are not seeing risk and stability are down. We are going to sit with the clients and understand the carrier networks and how they are going to service freight. And then we have to look at our clients in the eye and say here is what is going to happen. What will give us the ability to do that is the way we strategically manage data. It is important to have strategic discussions instead of emotional discussions with clients.
If you are in the market and you are confused because your rates are all over the place, one you are not alone! And two, the way to help yourself is getting a really good data analytic process down. That way you can measure the market and your freight/lanes in the current market conditions.
Get strategic with data and capacity!
