Dynamic Pricing for Carriers. How Trucking Companies Can Remain Competitive with Smart Pricing Algorithms

Dynamic Pricing for Carriers. How Trucking Companies Can Remain Competitive with Smart Pricing Algorithms

Dorota Owczarek - October 28, 2022

As a transportation company, you face stiff competition from other trucking firms. You need to find ways to remain competitive, and dynamic pricing can help. With dynamic pricing algorithms, you can set flexible prices that adapt to the current market conditions. This will help you stay ahead of the competition and increase your profits.

In this article, we will discuss how dynamic pricing algorithms help carriers by optimizing prices, reducing customer churn, and making it easier to compete within the transportation services sector.

Dynamic Pricing Model - What Is It?

A dynamic pricing model is a tool that helps companies set prices based on real-time market conditions. It takes into account supply and demand, competitor prices, customer churn, and other factors to determine the optimal price for a product or service.

Static pricing (with single price point) vs. dynamic pricing (with multiple price points)

Static pricing (with single price point) vs. dynamic pricing (with multiple price points)

Dynamically Adjust Pricing Based on Market Demand

Dynamic pricing enables you to adjust your prices in real time based on current market demands. If demand is high, you can raise your prices to maximize profits. If demand is low, you can lower your rates to increase sales.

By constantly monitoring market conditions, you can ensure that you are always charging the optimal price for your services. This will help you stay ahead of the competition and increase your profits.

How Can Fleet Owners Apply Dynamic Pricing Models?

FTL and LTL carriers can use dynamic pricing models to optimize their prices and stay competitive. Here are a couple of angles that mature pricing models take into account:

Advanced Lane Analytics

One way to dynamic pricing is to use advanced lane analytics. This technology uses real-time network monitoring (from TMS and the system for tracking orders) and predictive analytics to track traffic patterns. By analyzing historical data, predictive analytics can identify trends and patterns that will help you forecast future demand. Machine learning models can estimate the probability of loading in a given location and therefore adjust the pricing for shipping quotes that end in that zip code. On the other hand, if you know that a lane is underutilized, you can lower your prices to attract more business. This information can be used to optimize your prices and ensure that you are always charging the optimal rate.

Shippers Segmentation

Not every shipper is willing to pay the same. You need to segment your customers based on their willingness to pay and price accordingly. Negotiation trends are also something to look at. Some transportation companies use dynamic pricing models to segment their customers and charge different prices based on their willingness to pay. For example, a carrier might charge a higher rate for a shipper that is always willing to negotiate and a lower price for a shipper that accepts the initial quote. Have you noticed which shippers or brokers will always negotiate on your offer while others take it without bidding? You need to be aware of this when preparing your dynamic pricing strategy, and machine learning models can automatically segment your customers at scale.

Dynamic LTL Pricing and Shipment Consolidation

If you’re in the LTL spot market, you need to constantly monitor market conditions and the state of your network to utilize options for shipment consolidation. Suppose you already have an order for a shipment that takes up half the truck’s space. In that case, you can immediately offer an attractive price if somebody asks for the same lane that would fit within the remaining truck capacity. Easy to execute when you’re managing a small fleet, but to approach the same problem at scale is a real challenge for LTL carriers, that’s where AI-based models for shipments consolidation that power a dynamic LTL pricing strategy come in. By automatically monitoring your network state and identifying opportunities for freight consolidation, you can utilize your assets and excess capacity more efficiently and make additional profit.

Features of a dynamic pricing model for LTL transportation

Features of a dynamic pricing model for LTL transportation

Related case study: Delivering a dedicated IT system to manage and sell freight deals and plan transportation

A major logistics company approached us to create a dedicated IT system to handle their core business process – managing and selling logistics deals.

Our challenge? The key challenge in the freight forwarding sector is cutting the time of concluding deals to an absolute minimum. The tool has to be very responsive and help in the smart matching of carriers and freight, fleet management, and other logistics operations. The platform helps shipping agents minimize fuel consumption, maximize operational efficiency, and optimize fleet performance by matching multiple loadings on a similar route with a single carrier. Read more about this case study.

Offer Competitive Prices to Reduce Empty Miles

Similarly, it would be best if you offered competitive rates to shippers to fill your trucks and reduce empty miles on unpopular lanes. Again, dynamic pricing can help you can automatically adjust your prices to reduce deadhead miles and running empty. By harnessing machine learning, businesses can locate possibilities for headhaul optimization and get suggestions on load matching and shipment routing. If predictive analytics models are employed for actual supply chain data, they can forecast the probability of finding the next load within an allocated location and timeframe. Based on this, the dynamic pricing model would readjust the pricing.

Benefits of Dynamic Pricing Models for Carriers

Dynamic pricing models offer several benefits for carriers, including:

Dynamically React to Changing Market Demand

By dynamic pricing, businesses can increase their profits by optimizing their prices based on real-time data and demand. Artificial intelligence models can help identify patterns and trends, allowing transportation businesses to forecast future demand and optimize their shipping rates accordingly.

Time Savings by Automating Shipping Quotes and Improved Customer Service

Dynamic pricing models can automate the quoting process and provide real-time quotes to shippers. This can save a lot of time for carriers, as they no longer need to prepare quotes for each shipment manually. In addition, dynamic pricing can improve customer service levels, as shippers can get instant quotes without waiting hours to get their rates.

Reduce Empty Miles and Deadheads

By offering competitive rates, carriers can fill their trucks and reduce empty miles. Similarly, dynamic pricing can help you minimize deadhead miles by automatically adjusting your prices to match market conditions.

Dynamic pricing models in logistics - solid base for automated freight qoute and three key pillars of logistics optizmization and supply / demand forecasting

Improved Asset Utilization and Increased Sustainability

Dynamic pricing engines powered by artificial intelligence technology can improve asset utilization by limiting excess capacity and helping carriers make more money. With dynamic pricing, carriers can automatically consolidate shipments, identify profitable and unprofitable lanes, and offer competitive rates to fill up their available capacity. As a result, dynamic pricing can help carriers become more sustainable and reduce CO2 emissions.

Target Specific Customers with Flexibly Pricing through Shipper Segmentation

Carriers can use dynamic pricing to target specific customers with flexible pricing. By segmenting shippers into different groups, carriers can offer different prices to different groups of shippers.

Gain Insights into Lane Imbalances and Identify Opportunities

With dynamic pricing, carriers can gain insights into lane imbalances and identify opportunities for optimization. You can more efficiently utilize your assets and capacity by automatically monitoring your network state and identifying opportunities for freight consolidation.

Ease of Training for New Pricing Managers

Becoming a pricing manager requires long training and experience. But with a dynamic pricing engine, the pricing is automated, and therefore it is easy to train new pricing managers. With dynamic pricing, all you need to do is input freight details, and the dynamic pricing algorithm will take care of the rest.

Proactively Test and Adjust Rates with Data-Driven Pricing

It is hard to alter the pricing strategy and evaluate its outcomes if everything is manual. But with dynamic pricing, all you need to do is input different price points into the dynamic pricing algorithm, and it will automatically test and evaluate the results. Based on the data, you can then decide how to adjust your rates.

Getting Started with Dynamic Pricing Models

If you’re looking for a dynamic pricing engine that can help your business react to changing market conditions, save time on the quoting process, and reduce CO2 emissions, contact nexocode. Our team of AI experts is ready and waiting to partner with you to create a stellar pricing engine that drives sales and enables you to grow. Contact us today to learn more about how dynamic pricing can benefit your business!


Getting the price right in logistics - McKinsey & Company

What really matters in B2B dynamic pricing - McKinsey & Company

About the author

Dorota Owczarek

Dorota Owczarek

AI Product Lead & Design Thinking Facilitator

Linkedin profile Twitter

With over ten years of professional experience in designing and developing software, Dorota is quick to recognize the best ways to serve users and stakeholders by shaping strategies and ensuring their execution by working closely with engineering and design teams.
She acts as a Product Leader, covering the ongoing AI agile development processes and operationalizing AI throughout the business.

Would you like to discuss AI opportunities in your business?

Let us know and Dorota will arrange a call with our experts.

Dorota Owczarek
Dorota Owczarek
AI Product Lead

Thanks for the message!

We'll do our best to get back to you
as soon as possible.

This article is a part of

AI in Logistics
51 articles

AI in Logistics

Artificial Intelligence is becoming an essential element of Logistics and Supply Chain Management, where it offers many benefits to companies willing to adopt emerging technologies. AI can change how companies operate by providing applications that streamline planning, procurement, manufacturing, warehousing, distribution, transportation, and sales.

Follow our article series to find out the applications of AI in logistics and how this tech benefits the whole supply chain operations.

check it out


Insights on practical AI applications just one click away

Sign up for our newsletter and don't miss out on the latest insights, trends and innovations from this sector.


Thanks for joining the newsletter

Check your inbox for the confirmation email & enjoy the read!

This site uses cookies for analytical purposes.

Accept Privacy Policy

In the interests of your safety and to implement the principle of lawful, reliable and transparent processing of your personal data when using our services, we developed this document called the Privacy Policy. This document regulates the processing and protection of Users’ personal data in connection with their use of the Website and has been prepared by Nexocode.

To ensure the protection of Users' personal data, Nexocode applies appropriate organizational and technical solutions to prevent privacy breaches. Nexocode implements measures to ensure security at the level which ensures compliance with applicable Polish and European laws such as:

  1. Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (published in the Official Journal of the European Union L 119, p 1); Act of 10 May 2018 on personal data protection (published in the Journal of Laws of 2018, item 1000);
  2. Act of 18 July 2002 on providing services by electronic means;
  3. Telecommunications Law of 16 July 2004.

The Website is secured by the SSL protocol, which provides secure data transmission on the Internet.

1. Definitions

  1. User – a person that uses the Website, i.e. a natural person with full legal capacity, a legal person, or an organizational unit which is not a legal person to which specific provisions grant legal capacity.
  2. Nexocode – NEXOCODE sp. z o.o. with its registered office in Kraków, ul. Wadowicka 7, 30-347 Kraków, entered into the Register of Entrepreneurs of the National Court Register kept by the District Court for Kraków-Śródmieście in Kraków, 11th Commercial Department of the National Court Register, under the KRS number: 0000686992, NIP: 6762533324.
  3. Website – website run by Nexocode, at the URL: nexocode.com whose content is available to authorized persons.
  4. Cookies – small files saved by the server on the User's computer, which the server can read when when the website is accessed from the computer.
  5. SSL protocol – a special standard for transmitting data on the Internet which unlike ordinary methods of data transmission encrypts data transmission.
  6. System log – the information that the User's computer transmits to the server which may contain various data (e.g. the user’s IP number), allowing to determine the approximate location where the connection came from.
  7. IP address – individual number which is usually assigned to every computer connected to the Internet. The IP number can be permanently associated with the computer (static) or assigned to a given connection (dynamic).
  8. GDPR – Regulation 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of individuals regarding the processing of personal data and onthe free transmission of such data, repealing Directive 95/46 / EC (General Data Protection Regulation).
  9. Personal data – information about an identified or identifiable natural person ("data subject"). An identifiable natural person is a person who can be directly or indirectly identified, in particular on the basis of identifiers such as name, identification number, location data, online identifiers or one or more specific factors determining the physical, physiological, genetic, mental, economic, cultural or social identity of a natural person.
  10. Processing – any operations performed on personal data, such as collecting, recording, storing, developing, modifying, sharing, and deleting, especially when performed in IT systems.

2. Cookies

The Website is secured by the SSL protocol, which provides secure data transmission on the Internet. The Website, in accordance with art. 173 of the Telecommunications Act of 16 July 2004 of the Republic of Poland, uses Cookies, i.e. data, in particular text files, stored on the User's end device.
Cookies are used to:

  1. improve user experience and facilitate navigation on the site;
  2. help to identify returning Users who access the website using the device on which Cookies were saved;
  3. creating statistics which help to understand how the Users use websites, which allows to improve their structure and content;
  4. adjusting the content of the Website pages to specific User’s preferences and optimizing the websites website experience to the each User's individual needs.

Cookies usually contain the name of the website from which they originate, their storage time on the end device and a unique number. On our Website, we use the following types of Cookies:

  • "Session" – cookie files stored on the User's end device until the Uses logs out, leaves the website or turns off the web browser;
  • "Persistent" – cookie files stored on the User's end device for the time specified in the Cookie file parameters or until they are deleted by the User;
  • "Performance" – cookies used specifically for gathering data on how visitors use a website to measure the performance of a website;
  • "Strictly necessary" – essential for browsing the website and using its features, such as accessing secure areas of the site;
  • "Functional" – cookies enabling remembering the settings selected by the User and personalizing the User interface;
  • "First-party" – cookies stored by the Website;
  • "Third-party" – cookies derived from a website other than the Website;
  • "Facebook cookies" – You should read Facebook cookies policy: www.facebook.com
  • "Other Google cookies" – Refer to Google cookie policy: google.com

3. How System Logs work on the Website

User's activity on the Website, including the User’s Personal Data, is recorded in System Logs. The information collected in the Logs is processed primarily for purposes related to the provision of services, i.e. for the purposes of:

  • analytics – to improve the quality of services provided by us as part of the Website and adapt its functionalities to the needs of the Users. The legal basis for processing in this case is the legitimate interest of Nexocode consisting in analyzing Users' activities and their preferences;
  • fraud detection, identification and countering threats to stability and correct operation of the Website.

4. Cookie mechanism on the Website

Our site uses basic cookies that facilitate the use of its resources. Cookies contain useful information and are stored on the User's computer – our server can read them when connecting to this computer again. Most web browsers allow cookies to be stored on the User's end device by default. Each User can change their Cookie settings in the web browser settings menu: Google ChromeOpen the menu (click the three-dot icon in the upper right corner), Settings > Advanced. In the "Privacy and security" section, click the Content Settings button. In the "Cookies and site date" section you can change the following Cookie settings:

  • Deleting cookies,
  • Blocking cookies by default,
  • Default permission for cookies,
  • Saving Cookies and website data by default and clearing them when the browser is closed,
  • Specifying exceptions for Cookies for specific websites or domains

Internet Explorer 6.0 and 7.0
From the browser menu (upper right corner): Tools > Internet Options > Privacy, click the Sites button. Use the slider to set the desired level, confirm the change with the OK button.

Mozilla Firefox
browser menu: Tools > Options > Privacy and security. Activate the “Custom” field. From there, you can check a relevant field to decide whether or not to accept cookies.

Open the browser’s settings menu: Go to the Advanced section > Site Settings > Cookies and site data. From there, adjust the setting: Allow sites to save and read cookie data

In the Safari drop-down menu, select Preferences and click the Security icon.From there, select the desired security level in the "Accept cookies" area.

Disabling Cookies in your browser does not deprive you of access to the resources of the Website. Web browsers, by default, allow storing Cookies on the User's end device. Website Users can freely adjust cookie settings. The web browser allows you to delete cookies. It is also possible to automatically block cookies. Detailed information on this subject is provided in the help or documentation of the specific web browser used by the User. The User can decide not to receive Cookies by changing browser settings. However, disabling Cookies necessary for authentication, security or remembering User preferences may impact user experience, or even make the Website unusable.

5. Additional information

External links may be placed on the Website enabling Users to directly reach other website. Also, while using the Website, cookies may also be placed on the User’s device from other entities, in particular from third parties such as Google, in order to enable the use the functionalities of the Website integrated with these third parties. Each of such providers sets out the rules for the use of cookies in their privacy policy, so for security reasons we recommend that you read the privacy policy document before using these pages. We reserve the right to change this privacy policy at any time by publishing an updated version on our Website. After making the change, the privacy policy will be published on the page with a new date. For more information on the conditions of providing services, in particular the rules of using the Website, contracting, as well as the conditions of accessing content and using the Website, please refer to the the Website’s Terms and Conditions.

Nexocode Team