It’s just another Tuesday, not a particularly special day by any means. You prepare your regular shipment for transit when your carrier rejects it. This probably means some extra work and maybe additional costs because you have to go deeper into your route guide to get your freight shipped. Does this sound at all familiar?
One C.H. Robinson customer experienced a similar situation. They tried to find out why primary carriers were rejecting tenders. Their research found an increased number of rejections for shipments within the 100-250 mile distance span. Practitioners of transportation know there are many influencers to route guide performance. These findings prompted C.H. Robinson to question if distance as a material influencer was isolated to this single customer or if distance is a variable to route guide performance for all or most shippers.
C.H. Robinson saw an opportunity to potentially answer questions that plague many shippers, “why was my tender rejected?” We challenged Massachusetts Institute of Technology’s Center for Transportation and Logistics (MIT-CTL) student, Yoo Joon Kim, to determine just how influential distance and volatility are on carrier rejection rates on high volume lanes. Understanding what influences truckload pricing and why carriers reject freight tenders is integral to route guide performance. We hoped to answer: To what degree do distance and volatility of tenders affect carriers accept/reject decisions? The hypothesis was that distance and volatility are both meaningful influencers.
In the end, the results were less significant than anticipated. Here is a link to the research: Analysis of Truckload Prices and Rejection Rates. Neither distance nor variability was a strong determinate for rejection, any correlation was of relatively minor consequence. When it comes to shorter and less consistent shipments (irregular patterns of load volume), rejection rates do increase slightly, and longer lanes (over 100 miles), even with consistent volumes, have higher tender rejection rates. However, any correlation was minimal. Neither distance, nor volatility sufficiently explained the tender rejection rates for any given lane.
So what does this mean? Simply put, other factors aside from distance and volatility play a greater role in influencing carrier rejection. So while the findings across a broad customer set did not produce the same results as the original research of one of our customers, the information gathered is still relevant. We now have a clearer understanding to these two variables on route guide performance.
Many aspects of supply chains, business processes, and policies can influence the attractiveness of freight. As example, our research on the lead time of shipment tenders showed a direct correlation of short lead time and higher rejections. C.H. Robinson will continue to sponsor research to help better understand the impact of how the many attributes of transportation strategies and operations affect pricing and route guide performance.