KSMTA Introduces Expanded FreightMath 2.0 Platform To Revolutionize Network Profitability

In an era where data drives decisions, KSMTA is pleased to launch FreightMath^™ 2.0, a fundamental tool for Over-the-Road (OTR) trucking companies seeking to maximize profitability and efficiency. This next-generation model offers unparalleled insight into network performance, allowing carriers to bridge the gap between potential and actual profitability. By providing a comprehensive analysis of each element in a trucking network, FreightMath 2.0 gives companies the tools they need to make informed, data-driven decisions that enhance operational efficiency and drive bottom-line growth.

The Evolution of FreightMath

FreightMath 2.0 is a significant upgrade from its predecessor and offers new features, an improved algorithm, and greater flexibility for users. The model was built from the ground up, integrating years of experience and client feedback to meet the evolving needs of the trucking industry. FreightMath is designed to evaluate both financial and operational aspects of a trucking network, enabling companies to identify underperforming elements – such as specific lanes, customers, or geographic areas – and target those areas for improvement.

The foundation of FreightMath 2.0 lies in its ability to quantify the profitability of each segment of a trucking network. By analyzing financial data, geographic information, and chronological data points for every load and stop, the tool delivers a detailed breakdown of how a trucking company’s network is performing and where improvements can be made. FreightMath 2.0 is a valuable resource for your OTR network.

Key Highlights of FreightMath 2.0

Measuring Network Profitability: FreightMath Potential (FMP) vs. FreightMath Actual (FMA)

One of the most critical features of FreightMath 2.0 is its ability to measure the difference between FreightMath Potential (FMP) and FreightMath Actual (FMA). These two metrics form the cornerstone of the model, providing a clear picture of a company’s overall network performance.

• FreightMath Potential (FMP): FMP evaluates how freight should have performed under ideal conditions, using standardized inputs such as time, mileage, and other operational factors. It provides an accurate valuation of freight performance based on what is expected to occur in an optimized network.
• FreightMath Actual (FMA): FMA assesses how freight actually performed using real-time data such as actual transit times, loaded and empty miles, and other performance metrics. This provides carriers insights to and understanding of the causes driving operational inefficiencies.

The gap between FMP and FMA offers a clear insight into where operational improvements can be made. By identifying discrepancies, trucking companies can target specific areas for improvement, whether it’s optimizing routes, reducing transit or load/unload times, or improving driver performance.

The Margin Core (MCore) Algorithm

FreightMath 2.0’s enhanced Margin Core (MCore) algorithm calculates one-way profitability for every segment of a trucking network. MCore provides a detailed analysis of the revenue and costs associated with both loaded and empty segments of a route, divided by the time associated with each segment. The algorithm takes into account both loaded and empty miles, ensuring that carriers have a complete picture of how each leg of a route contributes to overall profitability.

Operational Deterioration Tracking

FreightMath 2.0 allows carriers to track operational deterioration over time by comparing FMP and FMA across multiple periods. This feature highlights trends in network performance, helping companies spot areas where efficiency is declining. By tracking these trends, carriers can implement corrective actions before inefficiencies lead to significant profit losses.

For example, FreightMath 2.0 might reveal that a particular lane or customer has become less profitable over time. This could be due to increased transit times, higher fuel costs, or longer empty miles. Armed with this information, trucking companies can make data-driven decisions to either improve the performance of that lane or customer or reallocate resources to more profitable areas of the network.

FreightMath Data Integration

FreightMath 2.0 is built to seamlessly integrate with existing data systems, making it accessible for companies using different Transportation Management Systems (TMS). KSMTA has developed custom extraction packages for popular TMS platforms, including McLeod Loadmaster, TMW Suite, and TMW Truckmate. This flexibility ensures that carriers can easily incorporate FreightMath into their existing operations without major system overhauls.

Data integration extends beyond TMS platforms. FreightMath 2.0 also incorporates data from general ledger systems, providing a more comprehensive view of network profitability by linking financial data with operational performance. This integration allows for accurate activity-based costing, ensuring that all costs—whether fixed or variable—are accounted for in the model.

Strategic Profit Levers in FreightMath 2.0

FreightMath 2.0 offers several strategic profit levers that trucking companies can use to optimize their network and drive profitability.

Density Is a Key Driver of Efficiency

Density is a central concept in FreightMath 2.0. The model emphasizes that building density within a network leads to greater efficiency, which in turn drives velocity and profitability. By focusing on high-density lanes – referred to as “power lanes” – carriers can increase network efficiency and reduce the number of low-density “spider lanes” that often lead to losses.

Surgical Pricing for Maximum Profitability

FreightMath 2.0 introduces the concept of surgical pricing, which involves analyzing one-way rates from a network perspective and factoring in transit time, operational costs, and market conditions. The model provides tools for carriers to optimize both contractual and transactional freight rates, ensuring that they are pricing their services in a way that maximizes profitability.

Targeted Sales Strategies

Business development in trucking has traditionally been understaffed, but FreightMath 2.0 offers targeted sales strategies that help carriers identify specific areas of imbalance within their network, along with key lanes that will connect one strong area to another area. By targeting outbound shippers in undersold areas and inbound shippers in oversold areas, carriers can improve network profitability by aligning freight with their core network strengths.

Operational Alignment

FreightMath 2.0 encourages operational alignment by providing decision support tools that help carriers make informed, data-driven decisions. This ensures that day-to-day operations align with the company’s broader profitability goals, reducing the need for reactive decision-making and promoting proactive strategies.

FreightMath 2.0: Service Levels

FreightMath 2.0 offers three levels of service, allowing companies to choose the level of support and analysis that best fits their needs. Each level provides access to detailed peer-based benchmarks for FreightMath-related measures, and general ledger benchmarks.

• FreightMath Lite: An entry point to the FreightMath service offering, including access to the FreightMath dashboard and advisory support during onboarding (eight weeks).
• FreightMath Analytics Level: Full access to the FreightMath dashboard, pricing tools, and advisory support, including eight weekly meetings and a certification in FreightMath pricing.
• FreightMath Analytics + Advisory Level: The most comprehensive package, offering full access to the FreightMath platform, pricing tools, benchmarking, and ongoing advisory support, including custom projects tailored to the company’s needs.

Transforming Profitability in OTR Trucking

FreightMath 2.0 represents a game-changer for OTR trucking companies, providing the tools and insights needed to optimize network performance and drive profitability. By leveraging advanced algorithms, comprehensive data integration, and strategic profit levers, FreightMath 2.0 enables carriers to make informed, data-driven decisions that enhance efficiency, reduce costs, and boost margins. Whether you’re a small carrier looking to improve your network or a large operation seeking to fine-tune your profitability, FreightMath 2.0 offers the solution you need to stay competitive in today’s fast-paced trucking industry.

To learn more or discuss any of the ideas shared above, please contact a KSMTA advisor or complete this form.