Dive Brief:
- XPO Logistics' new pricing platform helped the carrier reach an 11% rate of price increases on contract renewals, Mario Harik, CIO and acting president of LTL, said in an earnings call.
- The technology has helped reduce pricing experts' manual tasks and processes by up to 80%, Harik said, enabling them to spend more time "negotiating with the customer and supporting our sales team to do so."
- "Now it’s tough to be able to get to how much of that was the work that the technology is doing versus the people are doing, but technology is definitely having a big contribution as part of that," Harik said.
Dive Insight:
When XPO set a goal last quarter to drive up pricing and yield as part of a five-point growth plan, Harik made it clear a newly-built pricing platform would play a big role. Now, details are emerging on how the technology helps.
During the earnings call, the CIO emphasized the value the technology brings to the pricing team. The technology does much more than just save time: It analyzes customer shipment data, mines old RFPs and feeds information to XPO's lead generation tools.
"This means our pricing experts are now able to focus more time on analyzing account performance, and we can negotiate with better results," Harik said.
The pricing platform, which launched in December 2021, uses machine learning to "visualize capacity" and "the potential impact of new volume" on the LTL network, Harik said in an email to Transport Dive. "This data enables us to offer dynamic pricing to customers that can optimize pricing for shipments based on the current real-time profile of the network."
In addition, customers can connect directly to the platform via an API, which provides "full visibility into pricing and tracking," according to Harik.
The new technology features have come hand-in-hand with other changes to XPO's pricing tactics. The carrier in April also hired David Phalen, an American Airlines veteran, to be the company's senior vice president of pricing for LTL in North America.
"David’s career includes decades of success in optimizing pricing for transportation sectors, including the airline industry, where he specialized in pricing and yield management," Harik said in the earnings call.
And prior to that, in Q4, XPO had pulled forward its general rate increase, levied accessorial charges on trailer detention, and charged customers for loads that prevent from optimizing trailer space — all to improve yield.
Still, Harik sees more opportunity for technology-based pricing improvements when looking ahead to Q2.
"This coming quarter, we’re launching new capabilities with a proprietary costing model that allows us to improve how we look at costing in our network across the board," Harik said during the Q1 earnings call.
