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Free standard rate estimation calculators on marketplaces(air, ocean, road). Will rail follow suit?

Updated: Dec 12, 2023

Transition in platforms step #6


As European rail-related multimodal freight platforms grow, I (re)visited an earlier finding* that such platforms should provide free (of charge) online calculators for the potential supply/demand side participants to assess the benefits of using the platform's services. In particular, the need for freight rate/cost estimation and standardised CO2 emissions calculators as tools was specified. Potential participants may decide to join the platform e.g. if their sales/procurement process for rail related transport capacity speeds up.


The search for this article focussed on rate/cost estimation calculator being offered as a free of charge (publicly accessible) tool by platforms that included European rail freight transport. With one exception (discussed later) no other platform could not be found.


Multimodal digital marketplaces, primarily using ocean, air, and road freight transport however appear to be offering free rate/cost estimation calculators as well as CO2 emissions calcultor (which several platforms may be also doing by now). A level of standardisation is visible amongst the platforms with respect to these calculators. What insights can these marketplaces provide that may also be interesting for the rail freight transport mode?


Thus, this article focuses on the question:

what insights can be drawn on the current state of standardisation with regards to free rate/cost estimation and CO2 emissions calculator offered by the multimodal digital marketplaces in air, ocean and road freight network industries?


The terms “free of charge”, level of standardisation and other choices made for the search are crucial, and provided towards the end of the article.


Key Insights

These are initial insights provided with examples. Although no generalized conclusions can be drawn on the basis, there are several takeaways.


For rate/cost estimation calculators, a marketplace must have scaled up or matured to have organised high supply/demand liquidity. This is so for two reasons. Firstly, that it can provide dependable estimates. Secondly, that the platform can afford a free of charge service as a new growth cycle to attract potential participants better.


Marketplaces thus strive to acquire such participants' trust by using a vast amount of data points (e.g. prices, shipments) that are continuously collected and updated from platform participants and other data sources. In freight transport, the data is aggregated in form of a freight index that supports comparison of different results. Examples of such indices include Freightos’ freight Baltic index FBX and the Air Index FAX, Upply’s (floated by Geodis) freight index, Container Xchange’s container availability index. Other tools offered for free are for volume calculation, demurrage charges etc.


Freightos (independent third party) and Searates (now a subsidiary of DP World, hence considered a private platform), appeared often in the search results. Freightos offers estimates and Searates provides quotes. In both platforms the same calculator functions for different transport modes.

  • Both platforms have similar structures with regards to what data must be provided to the calculator. The standardisation through the use of products related to containers, pallets etc. facilitates this setup positively.

  • All aforementioned platforms allow the participants to automate and simplify their booking processes. Their API (Application Programming Interface) enables participants to embed the calculator on their webpages or integrate it into their systems.

  • The documentation on the methodology of developing the index is publicly available. Upply's https://www.upply.com/en-gb/our-methodology has a well structured documentation on its methodology. The platforms use the indices for disseminating knowledge by developing their respective market intelligence reports.


Freightos’ CO2 emissions calculator follows the European standard EN 16258. Its the methodology for calculating and declaring the energy consumption and the GHG emissions of transport services (freight and passenger).


The differences can also be of interest to rail freight. For example,

  • Searates offer quotes for rail freight, it appears though, for selected routes. It allows for selections for different wagons e.g. full wagon load (FWL) and less than a wagon load (LWL). The option of including first/last mile with trucks also exists.

  • The value of the rate estimates/costs can differ on platforms for a variety of reasons. E.g. Market and geographical focus of the platform, choice of modes, routes, and type of freight and date of transport.

  • The data management organisation may also affect rate estimation calculations. E.g. based on how frequently the data is updated, algorithms used to aggregate data and estimate results. Further, the quality, correctness and completeness of data is crucial, as also the procedures for curating the data can affect the outcome.


The marketplaces appear to be extending their focus further. For example, as per Freightwaves news (2016) Freightos' intention with its rate estimator calculator is “to allow retailers, exporters, distributors and wholesalers to get immediate freight rate estimates for ocean, air, and trucking shipments across the globe, with the optional ability to book some of those rates on the Freightos marketplace”.

Also from Freightwaves news (2018), Upply has the vision of “a world where the supply chain is made simple and free for everyone, and to let them exchange what they want, when they want, and the way they want”.


Conclusion

Thus a level of standardisation with regards to rate/cost estimation calculators and CO2 emissions calculator is visible on marketplaces using air, ocean and road transport. What does this mean for the European rail freight? Medium/small shippers and freight forwarders in intermodal/multimodal transport can possibly compare rates that include rail freight transport modes using such calculators with greater ease. The platforms, in turn can gain the market trust in booking of rail services faster.


Will the rail related multimodal platforms in Europe follow the suit? Possibly, until the rail transport process becomes efficient, it may take time. The European Commission’s new proposal on combining transport modes is a positive step in this direction.


Choices and definitions

There exist several platforms (as discussed in earlier articles). After several rounds of search, I made three choices to base the findings on.

  • Type of platform: I have focussed only on marketplaces from the types of platforms discussed in earlier. There is openness to independent third-party platforms and to private platforms. Private platforms include those belonging to e.g. a shipping line, to a freight forwarding company, or to a consortium of companies.

  • Subscription: The term "free of charge" refers to a type of subscription for accessing and using a platform's services (details discussed later). The assumption is, that fewer hurdles for trials can convert some potential participants into subscribers.

  • Language: The keywords for search were in English.


Subscription: What does free of change mean?

Based on customer profiles and preferences (e.g., business needs, readiness to adopt, risk-taking, willing to pay, user experience), platforms may offer several subscription options. Such options include (and are not limited to):

  • free usage for selected services through a simple registration,

  • discounted/free trial period for full services. E.g. after a platform demonstration or on registration,

  • paid subscriptions for different types of usage requirements and

  • freemium, i.e. no registration, no charges, often basic information is available. subscription is voluntary.


With regards to "free of charge", it’s the definition of freemium that I am focussing on. Attention is required on “free”. Data entered in calculators is valuable for platforms that they most likely collect. Hence, there is a trade-off that the potential participants may accept for being able to find and compare rates from platforms without any financial charge. In this way they assess the benefits from the operational efficiency in their sales/procurement process for organizing the freight transport.


Level of standardisation

The goal is to understand the user input and the related output, without comparing the estimated results for rates. Further, whether the estimation methodology is documented, applied consistently, automated, and optimised. For the CO2 emissions what standards are in place that are also acceptable for the customers.


There are several parameters to describe the standardisation of calculators. For the rate/cost estimation calculator, the input details to the products and services required should be standardised. Here's a brief example for ocean freight, as observed in the aforementioned examples of marketplaces, it should function similarly for air freight.

  • the origin and destination locations (e.g. through standardised data selection for ports),

  • choice of transport mode (s),

  • the type of load (e.g. container) and the quantity (e.g. number of containers: 20', 40', 45'HC, 40'HC; FCL and LCL)


Inputs for air freight are similar, except that the type of load can change. These could be e.g. pallets, volume or packages and the respective quantity. The platforms may deliver several details for these inputs. At least following information is required as an output

  • an estimated rate (or a range) or a quote (valid for a particular date or time interval),

  • the respective transit time (or a range in terms of number of days)

  • what is included in the rate/quote,

  • where can additional charges may be levied.


The CO2 emissions can either be an output or a calculator can be provided. The calculation should be as per the norms provided by standard bodies.


Do you have views you would like to add/share on this post? What discussions on freight platforms would you find helpful? You can write to me here. More to continue in coming days!


* This requirement is from actors in supply/demand for rail related freight transport. It is one of the findings presented in the FSR Conference in year 2021.

**Data collection: The data collected is from November 2023 and updated till 10.December 2023.

***These are author's personal views. The data collection is based on the public sources available on the internet. The author takes no guarantees for this information.




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