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Unlocking the Art of Freight Buying: Is it more than just Science?
Although freight buying may seem like a simple process, it is actually more of an art than a science. In India, large companies rely on experienced logistic managers to buy freight at the best possible price. These managers depend on their own knowledge and their network of transporters to get the best rates. However, the Indian transportation industry is unorganized, which makes freight buying even more difficult and unpredictable.
When there are peak seasons like Diwali or Month-ends, we end up
Advancements in technology, such as data science and machine learning, can make freight buying more reliable, consistent, and predictive.
Companies that specialize in technology and logistics, such as Caliper Business Solutions, have utilized machine learning and data science techniques to make freight purchasing more consistent, reliable, and predictive.
Caliper Business Solutions’ team of experts, consisting of data scientists and logisticians, analyzed the freight buying patterns of a major FMCG manufacturer and arrived at a daily predictive buying rate. The machine learning algorithm predicts the freight rate by taking into account several factors such as fuel rates, seasonal changes, regional holidays like Diwali, Durga Puja, and Pongal, etc. It predicts the rate on a lane wise (e.g. Bangalore to Chennai) and vehicle capacity wise (e.g. 9 MT, 16 MT) basis.
The FMCG manufacturer is benefiting greatly from the predicted freight rate, which is a reference point they can use to validate actual buy rates and set selling prices. This approach has brought transparency to the system and made freight buying more of a science than an art for them.