Cargo pricing in the ocean freight industry has been facing challenges due to geopolitical shifts and economic uncertainties, resulting in major fluctuations in demand, capacity, and pricing. To navigate this complex landscape, carriers are under pressure to make accurate pricing decisions quickly and cost-effectively.
One of the obstacles hindering efficient cargo pricing is the fragmented nature of the supply chain, leading to a lack of data visibility. This makes it difficult for carriers to optimize revenue management decisions despite the wealth of data available. Legacy technologies and outdated processes further compound these challenges.
The sheer number of factors that influence cargo pricing, ranging from container size to additional charges, makes it essential for carriers to incorporate all variables accurately. However, managing individual price points in a rapidly changing market is not feasible on a large scale, leading to inconsistencies and inefficiencies in the pricing process.
To address these issues, the industry needs a more agile approach to pricing that leverages advanced technologies like machine learning. By using sophisticated algorithms to analyze vast amounts of data, carriers can identify patterns and optimize pricing strategies for high-value market segments. The application of machine learning can streamline pricing processes and improve decision-making in response to market changes.
By adopting a new ‘referential’ pricing model supported by modern digital revenue management systems, carriers can automate pricing and inventory management to meet evolving market demands effectively. This approach focuses on the highest ROI areas by volume, revenue, and bookings, enabling carriers to respond quickly to changes in demand and competition.
In summary, the ocean cargo industry must embrace digital transformation and advanced technologies like machine learning to enhance pricing strategies and revenue management. By simplifying processes, automating critical tasks, and leveraging data analytics, carriers can improve sales conversion, margins, and capacity utilization in a highly competitive market environment.
