Exploring the impact of Rate IQ on transportation expenses
In today’s interconnected global marketplace, shippers face constant challenges in managing their transportation expenses. One of the most critical factors influencing their bottom line is the fluctuation of freight rates. Whether moving goods domestically or internationally, the cost of shipping can significantly affect a company’s profitability and competitiveness.
Freight rates are determined by a variety of factors, including fuel costs, demand, capacity, regulations, and market trends. These rates can change rapidly, making it essential for shippers to stay informed about current pricing. Having access to accurate and up-to-date freight rate information allows shippers to make smarter decisions when negotiating contracts, selecting carriers, and planning shipments. Ultimately, this knowledge empowers businesses to reduce transportation costs by identifying savings opportunities, avoiding unnecessary surcharges, and optimizing their logistics strategies.
This blog examines how e2open Rate IQ utilizes AI to deliver precise freight rate data, enabling shippers to achieve efficient and cost-effective transportation solutions.
What is Rate IQ?
The new Rate IQ model is an AI-powered freight rate index that analyzes a myriad of rate signals from lane, mode, and historical trends to predict rate benchmarks with precision accuracy; the index has a measurably higher accuracy and precision when compared to traditional statistical models. The model is trained by leveraging the power of our e2open network and puts rate predictions in the hands of shippers that they can trust.
The predictive model’s benchmark rates are seamlessly integrated into the TMS planning workflows, allowing shippers to confidently forecast and control their freight spend. These predictive rates are surfaced during planning, leading to faster and smarter freight tender decisions. By comparing these rates against contract rates, shippers can ensure they are securing cost-effective bids and negotiating with their carriers using data that accurately reflects current market conditions.
E2open already has benchmarking data that their Transportation Management customers and the Logistics as a Service (LaaS) team can access to compare their performance against industry standards across an elaborate set of KPIs. This data thus empowers them to understand and identify opportunities and trade-offs between cost and service when making business decisions.
How does Rate IQ use AI to provide even better guidance for shippers?
Shippers today rely on the freight rate index during peak seasons to negotiate rates for spot market loads. Without the freight rate index at their fingertips, shippers often rely on their own analysis, which involves exporting data, using lane averages, or quarterly benchmarks from previous years, requiring significant effort to produce insights. If shippers do not take any of the above steps, they risk overpaying and jeopardizing their overall transportation budget to support seasonal volume.
With Rate IQ embedded in the TMS, shippers will gain insights without the extra effort. Alongside the rate benchmark, the new AI-rates will display a confidence score, providing shippers with visibility into the strength of the recommendation.
Can you describe how Rate IQ identifies opportunities for shippers to lower their transportation costs?
When leveraged properly, Rate IQ can do more than identify lanes where shippers are overpaying to a benchmark; it can also be used as a type of control line to measure when performance changes over time or within subsets of a business.
If rates are generally softening, then the expectation would be that contracted lanes (which are typically fixed pricing) will become less competitive to the index over time. Therefore, a change from –5% below the benchmark to –1% below the benchmark has meaning and can be used to ensure rates are not just meeting market expectations but also moving with the market conditions appropriately.
How does Rate IQ help shippers compare carrier rates and choose more cost-effective shipping options?
Rate IQ enables shippers to compare all their existing rates and potential rates against a standard benchmark, providing a uniform method for measuring performance against market standards.
Oftentimes, carriers submit unrealistically low bids to win business or do so with a marked difference in performance expectations. Without market context for a given lane, choosing the lowest possible rate could set a shipper up for costly service failures or spot market situations when the bidding carrier can’t keep its commitment. Again, the benchmark rate acts as a control line. Too far below introduces risk, too far above introduces cost.
What specific features in Rate IQ contribute to improved negotiation power with carriers for better rates?
Enhanced accuracy of the benchmark contributes to its authority when negotiating. Benchmarks do not equal the buying price for a truck. However, shippers can use the data to indicate to carriers whether they are generally over- or underperforming both at a point in time and over time.
How does Rate IQ provide actionable insights or analytics that lead to measurable transportation savings?
Rate IQ is an exciting new tool, but what matters with any tool is how effectively it is used. E2open has the tools, products, and expertise to fully leverage a best-in-class benchmark such as Rate IQ. There are three distinct ways to use benchmarks. When all three are combined, the full value of Rate IQ can be realized.
- Operations
- The e2open TMS brings benchmarking to the planning process so shippers can make better pricing decisions in real time.
- Procurement
- The Rate IQ interface allows for bulk inquiries into rates that can be leveraged during RFP events to benchmark results
- E2 procurement services uses the benchmarks through managed events
- Analysis
- At any point TMS customers can report the benchmark rate for any historical load. This data can be ingested into systems of choice for easy historical and/or real time analysis
- E2open reporting as a service (RaaS) offers robust prebuilt solutions with advanced capabilities for fully leveraging benchmark data for historical analysis, not just in the area of cost but also service and execution.
E2open’s Rate IQ is reshaping how shippers manage transportation costs by delivering AI-powered freight rate benchmarks that are more accurate than traditional models. By integrating predictive rates and confidence scores directly into TMS workflows, shippers gain real-time insights for smarter planning and negotiations.
Rate IQ empowers users to compare carrier bids against market standards, identify cost-saving opportunities, and avoid risks tied to unrealistically low rates. Its actionable analytics support better decisions in operations, procurement, and analysis, making it a valuable tool for those looking to optimize freight spend and improve overall logistics performance.
Ready to take control of your transportation costs?
Explore how e2open TMS and Rate IQ can help your team make smarter, data-driven decisions. Reach out to your e2open representative or visit our website to discover more opportunities for savings and efficiency in your logistics operations.
