New C.H. Robinson offering addresses spot market savings for shippers

Minneapolis, Minn.-based global logistics services provider and freight forwarder C.H. Robinson recently rolled out a new offering that enables shippers to assess how their spot market rates compared to a trusted third-party benchmark and highlights where savings can be found.

The new offering, entitled Market Rate IQ, was created by the company’ technology incubator, C.H. Robinson Labs, and company officials said that it is the only tool that highlights to shippers which factors in their United States spot pricing are market-driven and which ones are outside of their control. What’s more, it explained that it is the lone tool incorporating DAT’s RateView, a database comprised of U.S. spot freight lanes.

And Robinson observed that that timing is right for Market Rate IQ, as the spot market has served as an outlet for shippers, with supply chains being impacted by global disruptions and require last-minute changes and short-term decisions, too. And it noted that since January 2020 load postings have risen 176%, compared to trucks seeking loads down 5%, with that imbalance leading to rate increases and shippers countering that by moving their spot freight around to various transportation services providers, an exercise that does not always lead to lower rates.

Tim Gagnon, head of Robinson Labs and C.H. Robinson’s vice president of analytics and data science, provided LM with a detailed overview of Market Rate IQ.

LM: What drove the need for Market Rate IQ? How long had it been planned/in the works?

Gagnon: With so much more freight moving to the spot market, shippers understandably want to know if they’re getting a fair rate, and there hasn’t been an easy way for them to do that. That’s why we built Market Rate IQ, using our technology strengths and our deep trove of data.

Shippers often carve their spot freight out to eight or 10 different transportation providers and take the average to get a sense of the market. That’s a lot of work without a lot of return. That doesn’t get you a true market comparison, that doesn’t show you why you’re paying what you’re paying, and it certainly doesn’t tell you how to get better rates—all of which Market Rate IQ does.

Robinson Labs first built a version of this tool customized for a couple of customers – then a couple more and a couple more. Pretty soon we realized how valuable it was, and it was clear we needed to build something that any customer with spot freight could use. We’ve been fine tuning it for a few months now, and when we ran a test of $1.2 billion in spot freight, it turned up more than $75 million in potential savings.

LM: What are its main benefits for shipper customers?

Gagnon: Using Market Rate IQ, shippers can for the first time see what’s driving their spot rates and what they can do about it. It’s the only tool in the industry that shows shippers which factors in their U.S. spot pricing are market-driven and which they can control, then reveals where they could save money.

We take that transparency a step further and show customers how their rates compare to a trusted independent benchmark in each of their shipping lanes and locations. It’s like going to the grocery store and instantly being able to see how the price of everything on your list compares to the market. Who doesn’t want to know if they’re paying more than market?

LM: Can you please provide a basic example of how it works?

Gagnon: Because C.H. Robinson moves more truckload freight than anyone in the world and has the largest network of carriers in North America, we are often able to secure better-than-average rates for our customers. But now with our Market Rate IQ technology, shippers get two things they can’t get anywhere else.

First, they get a breakdown of why they’re paying what they’re paying for spot freight. Market Rate IQ breaks down which factors in a shipper’s U.S. rates are market-driven and which they can control, such as lead time. Second, they can compare their spot freight rates not just to a general market average but to the market average in their specific shipping lanes and for their specific origins and destinations.

Even if they’re already paying below average rates, shippers can see how they could still save money.

For example, a customer might learn for the first time that 10% of their spend on spot freight is because of bunching too much freight in one lane on the same day. Because there are a finite number of trucks in any given lane, they’re paying for carriers elsewhere to drive out of their way. So they can potentially save up to 10% in the spot market by spreading out that freight a little. One customer who’s been using an early version of the technology has identified $158,000 in savings so far this year.

LM: What are the competitive advantages of this from a CHR perspective?

Gagnon: We know that technology and meaningful data are some of a shipper’s best weapons for coping with this unpredictable market. Virtually every company has been looking for a solution to help them navigate the spot freight market, so we built one.

Market Rate IQ is the first of its kind. It’s the only tool in the industry that shows shippers what’s driving their spot rates, which of those factors they can control and where they can save money. That was built by C.H. Robinson’s data science team at Robinson Labs, our tech incubator, on the strength of the largest freight dataset in the industry. It’s also the only tool in the industry that incorporates DAT’s RateView benchmark, the most comprehensive database of U.S. spot freight rates across 68,000 shipping lanes. Customers don’t have to just take our word for it that they’re getting competitive rates. We’re putting the information at their fingertips to see for themselves.

That makes Market Rate IQ an industry first in transparency, and where there is transparency there is trust.