Understanding Rate Definitions
DAT iQ Benchmark Analytics provides two primary settings for defining rates: DAT Defined and Company Defined.
- DAT Defined: Utilizes an algorithm to flag loads as spot. Specifically, it considers any lane rate at the five-digit zip code level that has been run for less than four days as a spot. It's important to note that each time we receive a contribution file from you, we retest to ensure accurate classification. This dynamic testing means that initial classifications can change based on the frequency of lane usage over time.
- Company Defined: Allows you to specify which loads are considered spot and which are contract based on your internal criteria. This setting is part of your contribution file.
Key differences and implications
- Spot Flagging: The DAT Defined setting tends to flag more loads as
spot compared to Company Defined criteria. This often arises from what we term "routing guide leakage," where
rates that are considered contract within your TMS system are flagged by our algorithm as spot due to their
infrequent occurrence (less than 4 days).
DAT
Defined
Company
Defined - Customization and accuracy: Many customers prefer the DAT Defined setting for its "light for light" comparison advantage, accommodating the unique definitions and standards across different companies. This approach is particularly beneficial in environments where API connections and index-based spot pricing are utilized.
Benchmark Rate Analysis
Adjusting Benchmark Rates
The platform's default setting compares spot loads to spot benchmarks and contract loads to contract benchmarks. However, you have the flexibility to adjust these settings for a more tailored analysis.
- Combined Benchmarking: This default setting offers a balanced view, comparing spot to spot and contract to contract.
- Spot Benchmarking for All Loads: Allows you to compare all loads, including contract loads, against the spot benchmark. This analysis can provide valuable insights, especially in varying market conditions.
Strategic Insights
Comparing contract rates to spot benchmarks can unveil opportunities for cost savings and strategic adjustments in both soft and tight markets. Identifying lanes where contract rates are higher than spot rates in a soft market could indicate potential savings by switching to spot for those specific lanes. Conversely, in a tight market, spotting cheaper spot rates against contract benchmarks can highlight opportunities for more cost-effective shipping options.
Practical Tips
- Explore Rate Definitions: Experiment with both DAT Defined and Company Defined settings to understand how they impact your freight analysis. Pay attention to how these settings influence the categorization of loads in your dashboard and adjust your strategy accordingly.
- Utilize Filters: The platform offers filters for focusing on spot or contract loads based on your rate definition settings. These tools can help refine your analysis and make more informed decisions.
- Benchmark Analysis: Regularly compare your rates against benchmarks to identify areas for improvement. Adjusting your benchmark comparison settings can reveal new insights and opportunities for optimization.