5 questions to ask when choosing a freight data provider
Truckload transportation is a hiOn the spot market side, timeliness of market information has always been critical for brokers and carriers. Recently, shippers too have recognized the need for more relevant, timely and actionable rate benchmarking and analytics, as transportation procurement is evolving from consisting primarily of a static annual RFP to more of a “continuous procurement” approach. ghly dynamic market. Shippers, brokers and carriers each have a vested interest in keeping apprised of the current state and pending trends in the market.
On the spot market side, timeliness of market information has always been critical for brokers and carriers. Recently, shippers too have recognized the need for more relevant, timely and actionable rate benchmarking and analytics, as transportation procurement is evolving from consisting primarily of a static annual RFP to more of a “continuous procurement” approach.
The rise of mini-bids and dynamic contracts have only added to the need for accurate and actionable rate and flow data.
While there are several potential sources for transportation data, they are not all equal. Each firm offering these services has different objectives, capabilities and motives. When selecting a transportation data analytics provider (or any data provider really), we think you should ask the following five questions.
1. What is the data provider’s focus and is it independent?
Is the data analytics portion of their business just a sideline? Are they in that market for purposes other than providing better decision making capabilities?
If the vendor is primarily, say, a 3PL, then you might be concerned about what their objective is. Similarly, if it is a media company, you have to question whether the data reports are intended to generate headlines or present a particular view so as to drive sales of other products rather than actually inform decision makers.
The DAT iQ mission is to provide accurate and actionable intelligence for shippers, carriers and brokers to make the most informed decisions possible. As anyone in the industry knows, these parties have different needs, so we offer different solutions to address those needs.
RateView Analytics – Our all-in-one freight rates product and its Ratecast predictions provide low latency information on the changing state of the freight market at the lane level. It’s designed to complement internal pricing algorithms to enable brokers and carriers to more quickly and efficiently come to agreement by providing a “state of the market” snapshot for the going rate on a lane.
Benchmark Analytics – Our freight network management product is intended for strategic analysis and compares a company’s actual activity to what the market and others within and outside their industry are doing. It is a way to rapidly identify potential trouble areas within your network so that you can take proactive actions to fix issues before they become real problems.
2. How transparent is the data provider?
Are they able to tell you exactly where the data comes from and how it is collected? For transportation, is all of the data coming from actual consummated transportation shipments or are proxies for actual transactions used? Can they describe how they process the raw data and turn it into a usable form?
At DAT iQ, every participating firm (shippers, carrier, and broker) knows they are contributing data to improve visibility into the market for themselves and others. The members of the Freight Market Intelligence Consortium all are briefed on exactly how the Benchmark Analytics tool works. Rateview Analytics is totally transparent in not only where the data comes from, but the level and quantity of data included in each lane that is being analyzed.
3. What is the breadth and age of the data that is collected and used?
To capture the complexity of the truckload market, you have to not only collect a lot of data, it also has to come from multiple industries. If the data comes primarily from one sector — say, general mass retailers working with large national carriers — then the resulting view of the total market will be skewed.
It is also worth asking if a wide range of the truckload industry is included in the data. If only EDI data is used, then it will be skewed to large fleets and shippers whereas the majority of the trucks on the road are in fleets less than 20 trucks. This was especially true during the pandemic as different industry sectors and even subsectors (e.g. food purchased in home vs. food for restaurants) behaved very differently from each other.
DAT iQ captures over $110B in transportation transactions each year. This means, looking back over the last 4 years, we have over half a trillion dollars in truckload freight transactions in our analysis.
As to age – the frequency that the data is updated and refreshed is a function of the purpose of the product.
For RateView Analytics, timeliness is key. A third of the transactions included in Rateview enter the database in less than one day from when the shipment is picked up. Another third of the transactions are entered within three days.
For Benchmark Analytics, the data is also refreshed daily, with participating shippers providing transactional shipments automatically on roughly a weekly basis. For strategic analysis, this is the drumbeat that makes the most sense for management and continuous procurement.
4. What is your level of trust with the data provider?
Basically, do you trust the company to represent the data they received in an appropriate manner and not inflate or aggrandize the data they have? Are they using your data properly and do the sources of data know they are actually contributing?
DAT iQ has been in the data analytics space for decades. Shippers, carriers and brokers all trust the data to make day-to-day and long term decisions. You cannot spell data analytics without DAT.
5. What are the analytic capabilities of the data provider?
Just collecting the data is not enough. It has to be processed, cleansed and harmonized. Does the data provider have the analytical heft to conduct this work?
Does the provider have analytics prowess to develop recommendations and draw insights from the data that help you make better decisions?
With clear and confident answers to these questions, you can identify a valuable freight data analytics partner to help guide your business decisions in an uncertain climate.