How to Evaluate Transportation Rates

Key elements to consider in a volatile environment

Measuring procurement success is crucial, especially in a volatile environment. What appears straightforward on the surface becomes complex when dealing with fluctuating conditions. For instance, a 10% price increase might seem unfavorable at first glance. However, if a tender concluded in late 2022 with a base price from 2021, a 10% increase could be considered a success. Conversely, while a 5% price reduction might seem positive, in a market that has decreased by 10%, it becomes less impressive. Thus, context is essential in evaluating outcomes. This article explores three key elements to consider when assessing your price evolution and levels and why it is important to analyze contract and spot prices differently.

Time

Time is a critical factor when assessing rate changes. The time horizon, on which we inspect the price evolution, significantly changes the outcome. For example, when examining the European rate curve and comparing this year's November values with those from the previous three years, we see that the base levels differ significantly.

Source: Market Insights