Assess the impact of inflation on shipping costs and budget for the future

Because inflation is a dynamic factor that can significantly impact a company’s bottom line, effective shippers adjust their budgets based on inflation data. By tracking inflation trends and how they impact operating expenses, companies can better anticipate cost fluctuations and avoid unexpected financial strain.

However, even during periods of economic volatility, organizations should rely on a variety of data, not just inflation data, to make informed decisions. Transportation costs and operational efficiency are influenced by multiple factors—many of which can be adjusted or controlled for more easily than inflation rates. This is why access to accurate data and comprehensive analytics tools is crucial for preparing financial plans that are robust and responsive to market conditions.

For example, by analyzing cost performance across different transportation modes (such as LTL, intermodal, and spot versus contract rates), companies can identify the most cost-effective mix of transportation options. Or when fuel prices suddenly increase, leading to a spike in carrier rates, DAT iQ Benchmark’s real-time freight market intelligence allows logistics teams to quickly identify alternate lanes with lower rate increases, minimizing cost impacts.

DAT’s add-on freight forecasting model Ratecast, which has shown to be 95% accurate on more than 7 million daily predictions, enables shippers to anticipate future cost movements and incorporate these projections into budget planning. This proactive approach allows companies to adjust their budgets based on expected rate changes due to inflation and minimize risk in volatile markets. For instance, when preparing for the peak holiday season, these rate forecasting tools can help a shipper determine whether they need to secure capacity and lock in contract rates or plan for a contingency fund to cover anticipated rate hikes and maintain profitability. During peak seasons in particular, technology that provides high-level visibility helps manage increased demand, optimize capacity, and minimize disruptions.

Shippers also leverage the Spot Market Performance Dashboard from DAT iQ to manage unexpected carrier rate spikes, whether due to inflation or other factors. This tool provides real-time visibility into rate forecasts across key lanes, allowing procurement teams to capitalize on the spot market when advantageous and avoid budget overruns due to unforeseen rate hikes. For example, if a national carrier tender increases by 10% from one quarter to the next, shippers can use DAT iQ tools to assess alternative strategies, such as securing additional capacity at lower spot market rates, thereby optimizing freight spend.

Of course, inflation-specific data is needed to maintain profitability and competitiveness. DAT iQ Benchmark offers the Inflation Overview Dashboard to enable shippers to monitor their transportation costs and compare them with industry benchmarks. For example, if a company discovers their transportation costs are increasing at a higher rate than the industry average, this data equips them to renegotiate contracts with carriers and implement other cost-saving measures.

Historical data and benchmarking help companies assess the effectiveness of past strategies, refine their cost structures, and implement proactive measures to mitigate inflation’s effects on their supply chains. By recognizing periods of higher inflation, companies can adjust their procurement schedules, negotiate better rates, or explore alternate shipping routes to manage costs more effectively. Benchmarking their performance relative to peers, they can identify areas where they have managed costs effectively, refine their financial strategies, and enhance their resilience to future inflationary pressures.

Real-time insights are invaluable, particularly in a fluctuating economy. DAT iQ Benchmark provides the most accurate and up-to-date freight market intelligence in the industry, with performance data on nearly every lane in North America and segmented insights by region, fleet, equipment type, and more. This wealth of real-time data allows shippers to pinpoint where inflationary pressures are most affecting transportation costs and proactively adjust their budgets and strategy to align with economic conditions.

Shippers can develop more accurate budgets that reflect both historical inflation trends and current market conditions with powerful analytics tools from DAT iQ Benchmark. By analyzing data on freight rates, fuel prices, carrier capacity, demand fluctuations, lane-specific trends, and overall market conditions, companies can make more informed decisions on budgeting, pricing strategies, and cost management. This forward-thinking approach not only secures your company’s financial resilience, but also enhances your ability to deliver consistent value to customers even in a turbulent economy.