Artificial intelligence (AI) is no longer a flashy term used without foundation. On the contrary, industries at all levels are expanding the use of technology applications to improve industry standards and increase efficiency.
Over centuries of exploiting supply chains, humans improved operations to the point where shipments could be completed in less than 24 hours. But with the arrival of technology only a few decades ago and its rapid progression to the point of surpassing human intelligence, it is time to investigate specific areas of the industry where technology can still improve operations, simplify and automate tasks, strengthen security measures and ultimately improve bottom lines. Enter the AI.
AI allows machines to mimic human processes, while doing it better. In supply chain, this could mean automating back-office tasks, enabling self-driving trucks, or helping to track warehouse inventory. But perhaps the most overlooked area for fleets is helping them navigate the ebbs and flows of the spot market.
The state of the cash market
Spot market rates are directly impacted by supply and demand. If demand for a product is high and supply is low, spot market rates rise. If demand for a product is low and supply is high, spot market rates fall. Consider the number of trucks and drivers available on the road at any given time and spot market rates can really fluctuate. After the last two years of high demand and many shipments to move, which has kept prices high, the tides are changing again.
While global shipping has slowed in recent months due to inflation, the spot market has cooled slightly. Full load rates have declined over the past two months, but the LTL industry has yet to see this trend translate. The reason why prices have not fallen as much and as quickly as the industry might normally expect is that inflation is also having an impact on fuel prices, a key factor which also goes into determining price.
So while shipments may have slowed, fuel prices are on the rise again, helping prices to hold steady. However, industry experts do not expect this to last and are bracing for a significant rate cut in Q4 and Q1 2023 as trade continues to slow.
Where AI Benefits Fleets
AI systems aim to provide the most accurate and up-to-date rates possible that will maximize long-term profits while taking into account current market conditions. With the market changing so much day-to-day, it can be difficult to keep up, especially if your fleet continues to do everything manually. Imagine the time it would take to review all available loads and what is being shipped, consider fuel prices, narrow down jobs that fit certain parameters, see if you have the equipment to handle the job and work with shipper to coordinate delivery details.
Thanks to technology, all of this can be automated with just a few clicks. The AI takes into account the type of loads your fleet is handling, reduces them based on what fits within those parameters, and can provide insight into which one would be best, while giving you the best price.
By implementing AI-based pricing software into its technology stack, it can continuously monitor the market and adjust prices in real time as conditions change. This allows fleets to be more agile and responsive to market changes, and know how to trade spot contracts correctly based on current market conditions, resulting in increased profits.
More importantly, by leveraging data and analytics, fleets can better use this information to negotiate better rates, which ultimately improves their bottom line. Automated technology also allows employees to focus on more critical tasks that require a more human element, such as interacting with customers and partners, which can improve the business in other ways as well.
AI opens the door for fleets to improve their business and conquer the spot market.
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