Elephants or goldfish?: An empirical analysis of carrier reciprocity in dynamic freight markets. (October 2020)

• Record Type: Journal Article
• Authors: Acocella, Angela; Caplice, Chris; Sheffi, Yossi
• Is Part Of: Transportation research. Volume 142(2020)
• Publication Date: 2020-10
• Subjects: Truckload freight transportation -- Tender acceptance -- Market cycles; Logistics -- Periodicals; Transportation -- Periodicals; 388.011
• DOI: 10.1016/j.tre.2020.102073
• Languages: English
• ISSNs: 1366-5545

Abstract

Highlights: Industry data shows shipper and motor carrier relationships change as markets cycle. Carriers appear to be myopic, respond to shipper's current market behaviors. Shippers must prioritize certain tight market behaviors for high tender acceptance. Shippers should price competitively to current market rates and tender consistently. Destination facilities should reduce dwell time to receive higher tender acceptance. Abstract: Dynamic macroeconomic conditions and non-binding truckload freight contracts enable both shippers and carriers to behave opportunistically. We present an empirical analysis of carrier reciprocity in the US truckload transportation sector to demonstrate whether consistent performance and fair pricing by shippers when markets are in their favor result in maintained primary carrier tender acceptance when markets turn. The results suggest carriers have short memories: they do not remember shippers' previous period pricing, tendering behavior, or performance when making freight acceptance decisions. However, carriers appear to be myopic and respond to shippers' current market period behaviors, ostensibly without regard to shippers' previous behaviors.