KSMTA Launches New Tool To Help Carriers Grow Their Power Lanes

KSMTA is pleased to announce a new tool to address specific lanes in a carrier’s freight network which are driving or detracting from overall profitability. This new interactive tool, called Lanes of Profit, takes the focus on network density to a more granular level, identifying specific origin to destination pairs, and categorizing by volume and profitability (or lack thereof).

Lanes of Profit builds on the premise of KSMTA’s recently released tool, Areas of Profit, which allows FreightMath^™ users to identify the geographic market areas which are more beneficial to service from a profit perspective and vice versa.

The underlying calculation for measuring profitability is at the core of FreightMath. With FreightMath, the profitability of every load is analyzed on its own merit (from origin to destination), using a measure called margin per day, as well on a network profitability level. This network profitability level estimates the margin benefit of each load based on three components:

• Origin to Destination: How it performed on its own
• Inbound Margin: How the carrier has performed over the last four weeks on all loads and empty movements going into the origin area associated with the load; and
• Outbound Margin: How the carrier has performed over the last four weeks on all loads and empty movements originating in the destination area associated with the load

By combining the three elements above, FreightMath assigns a score to rule them all. This score indicates, relative to network, whether the load performed better or worse – added more profit to the network or removed potential profit from the network. This score, called the FreightMath Value, leaves a trail of breadcrumbs for the user to understand the key drivers and detractors of profit on each load, typically falling into these three categories: price, time (transit, loading/unloading, dwell), inbound and/or outbound performance, and operational degradation.

Using FreightMath, Lanes of Profit uses color to indicate network profitability (green, yellow, red), and an interactive flow map which plots the directional lines for unique origins to destinations. It also uses color saturation to indicate load volume (density). The core mantra of FreightMath is that higher density will lead to greater efficiencies, and those efficiencies will lead to higher velocity. Improved freight velocity will ultimately improve the overall profitability of the freight network.

Lanes of Profit

Segmenting the Power Lanes From the Spider Lanes

The core mantra of KSM Transport Advisors is “density builds efficiency, efficiency builds velocity, and velocity builds profitability.” In order to visualize this concept, KSMTA has created a filter within Lanes of Profit to provide clients with a method to understand the profit disparity between their most to least dense lanes.

Spider lanes are defined as the lowest density unique origin and destination pairs (unique lanes) containing approximately 25% of load volume within a carrier’s network. As these are the lowest density lanes in a carrier’s network, it is quite common to observe as little as one to five loads per lane over the course of a month. Empirically, these lanes also yield the lowest profitability of all lane categories.

Power lanes are the opposite of spider lanes. Power lanes are the highest density lanes in a carrier’s network, marked by a relatively low number of lanes with significant volume per lane over the course of a month. Loads on these lanes generate the highest profitability, relative to average loads in a network.

Spider Lanes

Power Lanes

A Commitment to Density and Continuous Improvement

For trucking companies looking to streamline their operations and boost their bottom line, Lanes of Profit offers a unique, powerful solution that harnesses the power of data and technology to illuminate the path (lanes) to higher profitability. By integrating strategic insights with practical, easy-to-use tools, Lanes of Profit is set to become an indispensable asset in the freight and logistics sector.

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