Yield Management
Also known as: Revenue Management, Dynamic Pricing, Capacity Pricing
Definition
Yield management optimizes carrier revenue by adjusting prices based on demand, available capacity, and booking timing. Just like airlines charge more for last-minute flights, carriers may charge more when capacity is tight.
How Yield Management Works
| Factor | Rate Impact |
|---|---|
| High demand | Prices increase |
| Low capacity | Prices increase |
| Last-minute booking | Premium pricing |
| Off-peak times | Discounted rates |
| Long lead time | Better rates |
Yield Management Factors
Demand signals:
- Seasonal patterns
- Economic indicators
- Market trends
- Historical data
Capacity factors:
- Available equipment
- Driver availability
- Network balance
- Committed freight
Impact on Shippers
When capacity is tight:
- Spot rates spike
- Contract rates more attractive
- Tender rejections increase
- Service may decline
When capacity is loose:
- Spot rates drop
- Negotiating leverage improves
- Service levels high
- Carriers compete
Shipper Strategies
- Lock in contract rates for stability
- Tender with longer lead times
- Be flexible on pickup dates
- Build carrier relationships
- Use multi-carrier strategies
Carrier Yield Tools
- Pricing algorithms
- Demand forecasting
- Network optimization
- Customer segmentation
- Real-time rate adjustments
Example
Same lane, same week:
- Monday booking for Friday: $1,200
- Thursday booking for Friday: $1,800
- Spot quote Friday morning: $2,400
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