This sector is currently experiencing a significant increase in prices, and dynamic pricing allows carriers to adapt to these changes quickly.įreight spot rates and contract rates are two distinct value propositions for shippers, with contracts providing price and capacity year-long security. To remain competitive in a constantly changing market, many ocean freight carriers are turning to dynamic pricing models to price their services. One of the most important examples is dynamic freight pricing for ocean freight carriers. Dynamic Pricing Strategy in Logistics and Supply Chains - Examples Dynamic Freight Pricing for Ocean Freight Carriers How dynamic pricing strategy works? How changing variables impact price optimization. The second step is the price optimization model, which involves using the findings from the first stage to suggest prices for the entire services or products portfolio. The first stage assesses the impact of price changes on sales and profits. The most effective pricing engine is a two-stage machine learning system. The most common ML algorithms for dynamic pricing engines are based on: Not only that, but AI can also help businesses to be more strategic in their pricing by taking into account factors such as customer psychology and perceived value. This makes it the perfect tool for implementing a dynamic pricing model, as it can analyze large amounts of data quickly and make changes to prices accordingly.īusinesses that use AI-based dynamic pricing algorithms will be able to respond more quickly to changes in the market and maximize profits by adjusting prices at the right time. What Is AI, and How Does It Help?ĪI is short for artificial intelligence, a type of software that allows computers to learn from data and make decisions on their own. AI can be used to monitor competitor prices and track supply and demand for products or services to make informed decisions about when and how much to adjust prices. One way is to use artificial intelligence to create complex deep learning algorithms that automatically adjust prices based on changing market demand, conditions, and company targets.

There are several different ways companies can implement a dynamic pricing strategy. Still, with the help of artificial intelligence (AI), businesses can tailor their dynamic pricing strategy to fit their specific needs. Most of these methods are common in the transportation and logistics industry. There are many ways to implement a pricing strategy with dynamic pricing software, and they may all be used together to fit any business plan: This is done by considering current market conditions, competitor prices, and other factors that may influence demand. To adapt to these rapidly changing business needs, logistics businesses must be able to alter their pricing strategies accordingly.ĭynamic Pricing Strategy - How Does It Work?Īny dynamic pricing strategy aims to find the right price for a product or service that will result in tremendous profits for the business. All these events affected global supply chains, which, in turn, affected how logistics companies price their services. As a result of the pandemic, some companies have seen revenue decline, while others have experienced an increase in demand for their products and services. To remain competitive in their market, companies must be able to adjust their pricing quickly according to changes in supply and demand for their goods or services.ĬOVID-19 pandemic has exacerbated the need to enhance pricing tactics, noticeably raising the stakes. In the logistics industry, competition is high, and margins are low. Why Should Logistics Companies Look Into Novel Pricing Strategies? In this article, we will discuss why dynamic pricing is so important for companies in the transportation and logistics industry and how artificial intelligence can be used to create a successfulĭynamic pricing strategy. By setting flexible prices based on current market demands, companies can maximize profits by adjusting prices according to algorithms that take into account competitor pricing, supply and demand, and other external factors in the market. Dynamic pricing, also referred to as surge pricing, demand pricing, or time-based pricing, is a strategy that allows businesses to do just that. In a business as fast-paced as transportation and logistics, it is crucial that companies are able to price their products and services quickly and smartly.

Dynamic pricing algorithms