The implications of our study
Why aren’t dynamic-priced contracts ubiquitous yet? While the research demonstrates quantitative benefits for shippers and carriers in specific network segments, there are still practical implications to be considered. Some shippers are using dynamic-priced contracts on certain lanes within their networks, as demonstrated by a survey of Transporeon (a Trimble company) newsletter recipients. Responses revealed that there are still some technological and behavioral challenges to overcome. Standard TMS softwares are not set up to support easy frequent price changes.
The implications of our study
Why aren’t dynamic-priced contracts ubiquitous yet? While the research demonstrates quantitative benefits for shippers and carriers in specific network segments, there are still practical implications to be considered. Some shippers are using dynamic-priced contracts on certain lanes within their networks, as demonstrated by a survey of Transporeon (a Trimble company) newsletter recipients. Responses revealed that there are still some technological and behavioral challenges to overcome. Standard TMS softwares are not set up to support easy frequent price changes.
While there may still be integration challenges that remain, API pricing solutions are offered. Trimble Freight Marketplace, for example, provides dynamic capacity sourcing when traditional contracts fail.
Dynamic pricing's limits, spot market's necessity
However, there is still uncertainty and risk involved with dynamic-priced contracts that – while the data suggests they perform better than standard practice – make it difficult for transportation buyers to have a willingness to change. One goal of this research is to show how to integrate dynamic pricing into the portfolio of procurement options in a smart, strategic way.
When to use dynamic-pricing contracts:
When to use the spot market:
Low volume lanes
Last minute shipments
Inconsistent lanes
New lanes; no demand
Infrequent volume
Routing guide failures
When to use dynamic-pricing contracts:
✅ Low volume lanes
✅ Inconsistent lanes
✅ Infrequent volume
When to use the spot market:
✅ Last minute shipments
✅ New lanes; no demand
✅ Routing guide failures
A broader question that still arises is: if dynamic-priced contracts become the norm, what will be the consequences on the spot market?
Dynamic-priced contracts only seem to be suited to low-volume, inconsistent and infrequent volume lanes, which only represent about 20% of total TL volume. Still, they require a minimum threshold of volume to make the cost and performance benefits worth the effort. That minimum volume threshold depends on the shipper’s overall network, carrier size and regional coverage, among other factors. The spot market still holds an important place as a relief valve for transportation – last-minute shipments, new lanes with no historical demand upon which to base forecasts, routing guide failures and carriers looking for backhauls to reposition and rebalance networks. This is an important role that is necessary in TL transportation due to the geographic and temporal nature of networks.
So, while dynamic-priced contracts have potential to reduce costs, improve performance and increase carrier revenue for a traditionally difficult segment of transportation networks to cover, the spot market will remain an important component.
Dr. Angi Acocella Research Scientist, MIT Center for Transportation & Logistics
About the author
Angi Acocella, who earned her Ph.D. in Civil Engineering at MIT's Center for Transportation & Logistics (CTL), specializes in freight transportation research, focusing on the dynamics between shippers and motor carriers and their impact on pricing and performance. Before her time at CTL, she was a Research Associate at Harvard Business School, co-authoring cases for technology, operations, and international economy curricula, with her prior research featured in prominent engineering, economics, and business journals. Her industry background includes modeling and testing thermal management designs for IBM's Z-series mainframe servers, as well as thermal stress testing at the chip manufacturing and packaging levels.
Dr. Angi Acocella Research Scientist, MIT Center for Transportation & Logistics
About the author
Angi Acocella, who earned her Ph.D. in Civil Engineering at MIT's Center for Transportation & Logistics (CTL), specializes in freight transportation research, focusing on the dynamics between shippers and motor carriers and their impact on pricing and performance. Before her time at CTL, she was a Research Associate at Harvard Business School, co-authoring cases for technology, operations, and international economy curricula, with her prior research featured in prominent engineering, economics, and business journals. Her industry background includes modeling and testing thermal management designs for IBM's Z-series mainframe servers, as well as thermal stress testing at the chip manufacturing and packaging levels.
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