Shippers Need Better Data Partners: A Deep Dive into Transfix’s Data Philosophy

Earlier this week, our Chief Economist at Transfix published an article in Global Trade Magazine titled “Rates are Moving Fast and Here’s Why”, putting forth a bullish and data-centered freight rate forecast for 2024 – although not quite as bullish as some industry and bank analysts. 

Because uncertainty is a given and the commercial investment in data is skyrocketing, I was inspired to take pen to paper last week to share how and why Transfix’s data philosophy differs from the mainstream. I am grateful to Supply Chain Management Review for publishing “3 Ways Data Can Be Better Utilized to Predict the Market Rebound.” 

The fact is that our cyclical industry is driven by the whims of consumer spending, geopolitics, and weather. The collective hope is that data will minimize risk and increase confidence in operational planning and decision-making – but not all data science models are created equally.  

Last year, one of the nation’s most recognizable big box retailers reported back to us that Transfix’s rate predictions were the most accurate of the outlooks they gathered. 

Here’s why our market outlook differs from the more dominant institutions, why I speak with our Chief Economist every day, and why access to data without the right models and expertise is a futile effort:

Unlike many financial institutions, whose approach is a top-down focus on macroeconomic aggregates and commercial incentives, our model is a bottom-up approach. We have a direct view into load and capacity granularity to detect and follow the momentum of smaller trends. Our rate prediction model utilizes machine learning (Seasonality Adjusted Gaussian Process) and forecasts all 18,000+ US lanes individually. 

Every single day, our data science team crunches millions of data points to observe patterns and developing trends before they become visible to the outer world. This is precisely where we gain an edge when predicting rates, since much of the capacity that is leaving the market is doing so under the radar, making no headlines. 

Meanwhile, many shippers are building out their 2024 RFPs with flat budgets, meaning shippers’ are operating under the assumption that 2024 is still a weak market. And of course, it benefits shippers to keep rates low – or does it? When trucking companies are earning the bottom of market rates with increasing operating costs, shippers operating on flat budgets are exacerbating the very conditions they are hoping to avoid. 

Capacity isn’t going to leave the market uniformly, so with our data and expertise, through our Lane Risk Analysis capabilities, we help shippers locate which lanes are at the highest risk of price and capacity slippage and where they could find themselves in trouble as seasonality kicks in and as rates spike. 

This is just one example of how our data modeling helps us lead as a strategic partner for shippers of all shapes and sizes.

Over a decade ago, my partner Drew McElroy and I sought to build the world's most connected and intelligent freight platform. In an era where data is ubiquitous and accessible, it’s common to think that every institution with access to data also has the keys to paradise. However, models and market environments change, so data alone will not suffice.  

So, while data isn’t a perfect predictor of the future, ours provides a trustworthy framework for risk and opportunity.

If you’re a shipper looking for a data-driven strategic partnership, I would love to talk. Jonathan@transfix.io.