Pricing is the single most important step of the entire cycle of a trip.
Typically, a client (say a manufacturer) enters into a fixed annual rate contract with transporters and transporters source trucks from the open market on spot rates that vary daily. Based on the historical data of the daily spot rates, transporters get a rough estimate of the annual average rate for a route & vehicle type combination. Add to that the transporter margin and the fixed annual rate contract with the client is determined. The daily spot rate hence directly impacts the profit margin of the client, the transporter and the supplier.
Apart from the trip distance and material weight, the pricing for a trip is determined primarily by the following factors.
- The demand-supply situation at both the origin and the destination – This is the biggest determinant of the pricing and it is a combination of:
- Load and return load availability – for example, on an average the trip rate of a 32ft MXL from Bhiwandi to Kolkata is ~Rs. 98,000 but the return rate is only ~Rs. 47,000. This is because Bhiwandi is one of the biggest demand centres of the country whereas the availability of return loads from Kolkata is comparatively low.
- Seasonality – for example, when apple shipments start from Jammu, the return rates to Jammu drop because suppliers rush to send their vehicles to Jammu for loading.
- Cyclicity – for example, demand for trucks and hence rates are high during month end because the supply chain planning teams at clients wait until the month end to push out most of the stock.
- Externalities – for example, during Chennai floods, due to the shortage of vehicles in Chennai, the ex-Chennai rates had skyrocketed to 30-40% higher than the average rates.
- Material type – more expensive goods such as electronics, or over dimensional goods are shipped at a premium.
- The number of loading/unloading points – with every increase in loading or unloading point, the trip rate increases by roughly Rs. 1000-1500 per loading/unloading point.
- Type of delivery – express delivery is priced at a premium compared to shipment with normal transit times.
Despite being so critical, price discovery and finalization is an extremely slow, antiquated and tedious process. Transporters have to make multiple calls to the brokers, who in turn have to make calls or reach out to multiple fleet owners or drivers to finalize the trip rate.
The taxi industry has seen a tremendous implementation of technology for pricing of trips – cabs at a digitally determined rate are just a click away from our doorstep. Imagine a world where trucks too can be booked online at digitally determined market rates. Imagine a world where all the data on all the above factors that determine to price in the trucking industry is available. Imagine there to be a central intelligence, where complex algorithms work on this data in real time to determine the pricing for a trip. Imagine there to be a simple one-touch app by which, instead of calling 10 brokers, transporters can instantly get today’s rate of 32ft MXL from Bhiwandi to Kolkata, place trucks at that rate, and possibly source more orders from their clients. Imagine a world where transporters can trust that they are not paying a higher than market price, and suppliers can trust that they are getting the fair price. Zero calls. Zero bargaining for rates. Zero headaches.
Vyom is creating that magical world of trucking where pricing becomes extremely simplified. Transporters, brokers, and truck owners can download the Vyom app and check the pricing for any route & vehicle type combination pan-India to be sure that they are paying or getting paid the fair price. Price transparency is building the much-needed trust in the network and is simplifying the day-to-day operations for everyone. By getting accurate rates faster, transporters are able to focus more on growing their business by engaging with their clients better, and suppliers are able to get more time available to fulfil more orders reliably.
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