Ocean carriers who wish to implement dynamic pricing software have seen the future.
Historic levels of demand, volatility, and global interconnectedness have created an ocean freight tightrope act—one that hard-to-predict supply chain hiccups stand ready to topple.
With no slowdown on the horizon, it’s safe to say ocean freight shipping has entered a new era. Luckily, technology has kept pace. Dynamic pricing software leverages the latest in AI and machine learning to help carriers keep up with rapidly changing conditions and maximize earnings.
But while the immense potential of dynamic pricing is clear, some ocean carriers find themselves struggling with a preliminary question:
Should we buy dynamic pricing software from a vendor or build our own in-house?
While there’s no one-size-fits-all answer, in most cases, buying a dynamic pricing solution with a proven track record is the way to go. In this article, we’ll explain why.
As McKinsey reported in 2020, “pricing has the highest and fastest impact on profitability of all available improvement levers.” Dynamic pricing software’s value to your organization is hard to overstate—but only if it works.
Getting dynamic pricing right requires incredibly broad and deep expertise as well as excellent cross-team communication. There may be carriers out there with the internal resources to successfully implement dynamic pricing in-house, but doing so is a significant challenge that carries plenty of risks.
Even if a carrier’s IT team builds dynamic pricing software that seems to work, it will be months or more before your organization can collect and analyze enough data to prove that the solution helps you earn more. And if the results are disappointing, you’ll be back at square one.
That’s why for most carriers, it makes sense to go with a solution that’s already up and running and proven to work. For example, BlueX’s dynamic pricing solution is already deployed globally and getting results at leading ocean carriers.
You may have done the math on how much in-house development will cost, but what’s that about the best-laid plans? IT projects are notoriously difficult to tame, and cost overruns and delays happen more often than not.
A Harvard Business Review study found that one in six projects the researchers analyzed had cost overruns of 200% or more and took nearly 70% longer than planned to complete.
When you buy a product from a vendor with a proven track record, you can skip the number crunching, guessing, and endless re-budgeting and just pay one price that you’ll know upfront.
Costs that are clear and contained also make it much easier to evaluate dynamic pricing’s payoff for your organization, promoting good decision-making and making it easier to advocate for future tech investments.
Given the recent upsurge in media reporting about the chaos that is container shipping in 2021, it’d be understandable if you were tired of hearing about how urgent the situation is.
But the fact is, the best time to implement dynamic pricing was yesterday—and the second-best time is today.
Experts have been forecasting that all ocean freight industry winners will be digitized and data-driven for several years. As a maritime consulting expert, Lars Jensen urged in 2020, “the digital change in the industry has been massively accelerated, and anyone not ‘on the train’ at this point needs to play catch-up real quick.”
Buying dynamic pricing software from a vendor gives you the shortest possible time-to-value. You’ll be reaping the competitive advantages dynamic pricing brings much faster than if you tried to build a solution in-house. Given the global shipping industry’s pace of change, those time savings could make a real difference for the future of your business.
At BlueX, we have a battle-tested process for getting carriers up and running with dynamic pricing. You can be using our system organization-wide in as little as 2 months. Here’s a glimpse at what the process looks like:
Even if an in-house team can successfully build a dynamic pricing solution, maintaining that solution so that it continues to provide value over the years is a tall order for any organization.
Does your in-house IT team have significant experience maintaining enterprise-level software? Will they be able to implement new features and upgrades in a time- and cost-efficient way? If core members of your IT team leave the organization, will their replacements be able to understand and update the existing code base?
These are all tough but important questions for CIOs and IT team leaders to address. In many cases, the unpredictable time and costs associated with maintaining an in-house product prove to be a serious Achilles heel for otherwise effective teams.
When you buy from a vendor like BlueX, you avoid maintenance headaches because maintenance and support are built-in. Want to learn more about how we support carriers who implement our dynamic pricing product? Click here.
We’ve spent much of this article talking about what your IT team might not be able to do. But of course, there are so many things they can do better than anyone else. Purchasing a dynamic pricing system from a vendor gets you immediate results on pricing while also freeing up your team to focus on matters related to long-term growth.
Your IT team has an important role to play in identifying and analyzing data unique to your organization, integrating and optimizing internal processes, and so much more. Saddling them with the task of creating a dynamic pricing solution would likely sideline them from their core work for many months or even years. Your team would certainly end up getting a crash course in AI and machine learning, but at what cost?
Aside from the focus required from your IT team, trying to build dynamic pricing software in-house may ultimately make it harder for your organization as a whole to implement dynamic pricing.
That’s because dynamic pricing is much more than just lines of code. It’s a change in the way your organization thinks about and executes pricing.
A well-designed dynamic pricing system isn’t hard to adopt, but you’ll need effective management strategies and thoughtful communication to get the most from it. Building dynamic pricing software is an IT behemoth that may distract from these core tasks.
The good news is that there’s no need to reinvent the wheel. BlueX is home to decades of experience in shipping logistics, business development, software engineering, and finance. We’ve built platforms transacting hundreds of thousands of containers and have already invested all the time, energy, and expertise needed to create a dynamic pricing system that’s proven to work.
These are some of the top reasons why many carriers will get the best results by buying dynamic pricing software from a vendor. If your organization has been leaning towards building in-house, you may still have questions. Can a vendor-supplied product meet our organization’s specialized needs? Will our data be secure? Find your answers to these by learning more about BlueX Dynamic Pricing and contacting our team here.