go up or down. This is where the difference between the median and the average comes into play.
So, if we use only the combined data set, we come to the wrong conclusion not only about accurate current rates for assets and for brokers, but also about the direction that rates are going for both assets and brokers.
Using MPact’s Rate Spectrum Data to Optimize Rates
When you’re faced with negotiating a rate for a lane, MPact gives you the data you need to know where rates currently stand. Your first task is to determine whether asset or broker rates are dominant on the lane in question. Go to the Order Trending screen in MPact, and you will be able to see numbers that tell you who is controlling capacity on that lane - carriers or brokers.
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For example, if the median is $1.80 per mile and the average is $1.95 per mile, there is upward pressure on the rate. When the average is above the median, there is upward pressure on the market, and when the average is below the median, there is downward pressure on the market. If there are no other forces at work, the median will gravitate toward equilibrium with the average.
The Rate Spectrum dials within MPact illustrate the data for Buy Line Haul Rates in red and Sell Line Haul Rates in green. The shading breaks up the data into the four quartiles, with the black line showing the median and the needle indicating the average. If the needle is to the right of the black line, there is upward pressure on the rate. If the needle is to the left of the black line, there is
downward pressure. If the needle is close to being the same as the black line, there is no substantial pressure, which means that rates in that market are relatively static.
The next task is to determine not only the current range of rates, but also to see if there is pressure on the rate to
With 20 minutes of training and a little practice, a new employee with decent negotiation skills will be able to compete with the most seasoned, old-school brokers, and those veteran brokers will get even better. You’ve got to know where the market is and where it’s going. Having this knowledge translates directly into the ability to set rates with more precision. When your people understand what the rates are doing in the market, they’re going to make better decisions, and when they make better decisions, you’re going to see net profit margins rise.
By Criss Wilson, McLeod Data Scientist ® 15
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