Science-based transportation

Shifting the portfolio mix

Read our essential report written by Dr. Angela Acocella to optimise your procurement and assignment decisions. 

Is there a perfect split of contract to spot in transportation?

It depends, of course. But one thing is clear: the balance is shifting. 

Navigating transportation procurement and assignment decisions can be daunting. The freight market is as volatile as ever and the traditional method of establishing contracts with carriers, to lock in prices and secure capacity, is no longer as efficient or reliable.  

This so-called coverage procurement approach with a 'set it and forget it' pricing practice has been creating ghost lanes (lanes that don't materialise), higher transport rates, extra work for procurement teams, and damaging carrier-shipper relationships. 

Written by Dr. Angela Acocella, a Researcher at Tilburg University School of Economics and Management and the MIT Center for Transportation & Logistics, this report contains actionable insights, based on scientific research and data collected from Transporeon customers. Find out:

  • Why a coverage procurement approach falls short in delivering the intended advantages to shippers. 
  • How shippers can identify network segments unsuitable for contracts and strategically opt for spot assignments for better outcomes.
  • How alternative contracts like dynamic pricing can outperform traditional fixed-price contracts, delivering better results for both shippers and carriers.

What’s inside?

"While it may feel like additional security to have a contract rate on file, this coverage strategy may be costing shippers more. We should not throw everything into the RFQ and hope for the best. Rather, I suggest a wait and see approach: wait until demand materialises on a lane and either set up contracts later (sometimes called mini-bids or a continuous procurement approach) or assign these loads via the spot market until the lane volumes stabilise."


Who is this report for?

  • Procurement managers: understand exactly which lanes to contract, reduce administrative efforts and introduce dynamic pricing into the mix.
  • Supply chain and logistics managers: strategically assign loads via contract and spot, and find capacity at cheaper rates.

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