Relationship between price and performance : an analysis of the US trucking market

Abstract

This thesis focuses on the study of the carrier-shipper relationships in the US trucking market. It uses data provided by a leading third party logistics (3PL) company to explore and determine whether a relationship exists between the prices charged by the carriers and the performance that they provide to the shippers. The performance metrics defined in the thesis are measured in three dimensions: on time pick-up, on time delivery, and acceptance ratio. The research uses ordinary least square (OLS) regression to study the effect of the performance parameters on the cost per load of a shipment. The research demonstrates that there is a mild relationship between on time delivery performance and price. With increase in on-time delivery performance, the price increases till a threshold is reached, beyond which it stabilizes. We found that a relationship exists between on-time pick-up and delivery. Since carriers who pick up late are able to deliver on time 80% of the times, the research could not find a direct relationship between on-time pick-up and price. The research also found that increased lane loyalty from a shipper to a carrier can lead to lower rates.