What Can You Expect on Contract Rates in 2016?

This is the time of year when companies try to predict the future by looking to the past. Did 2015 offer any clues for 2016? The short answer is “yes,” but you may need to do a little research.

Shippers are working on their 2016 transportation budgets, and that process typically includes an evaluation of core carriers. If you want to position your company at the top of your favorite shipper’s routing guide, it helps to know how you compare to the competition.

What’s New for 2016

DAT RateView™ recently introduced some new data and dynamic tools that make it easier to identify trends in shipper-to-carrier contract rates, so you can benchmark your own pricing against the market. This helps you to price each lane strategically, with an eye to seasonality, competitive threats, and other factors, in addition to your own costs, pricing history and service levels.

You can view the high, low and median rates on 65,000 point-to-point lanes, as you choose date ranges for the past 30 days, 90 days, or 12 months. Seeing your own rates in a historical context lets you evaluate your own rates and customers. This lets you verify that your pricing strategy is right for each customer, and you can keep your prices where you want them to be in relation to the competition. You can also look to RateView for pricing guidance when bidding on new business that includes unfamiliar lanes or markets.

Find out more about contract rates and spot market rates in DAT RateView

DAT RateView also lets you see a 13-month history of rates on any lane, so you can account for seasonality. The chart above shows your rates in comparison to the overall market, so you can adjust your own pricing accordingly.

So, where does that leave us for 2016? Contract rates typically follow spot market trends, after a 3- to 6-month delay. Spot market rates skyrocketed in 2014, then declined significantly this year. Sure enough, we saw a big boost in contract rates in 2015, followed by a dip in the second half of this year.

Some industry analysts predict that carriers and shippers will agree to an additional 2% to 2.5% increase in line haul rates (excluding fuel surcharges) in 2016. Shippers are expecting to retain almost all the gains from reduced fuel costs, and capacity may have to tighten for carriers to see significant bottom-line improvements from low fuel costs. Some shippers may pressure carriers to reduce prices in competitive lanes, as spot market providers become more affordable. Some shippers are also deploying dynamic pricing models now, which spur an almost continuous bidding cycle, as carriers jockey for position in the routing guide. Using a tool like RateView to keep track of which markets are strong and which are weak will allow you to get the best rates.

For more info on DAT RateView, contact our award-winning customer support team at 800.551.8847 or fill out this online form.