How Index-Based Pricing Creates Value for Your Business
Previously, you’ve had two pricing model options for shipping freight – published and spot.
The published pricing model can lack flexibility. While the spot market is fluid and reflects current market rates, it is unpredictable. Uncertain market conditions make budgeting and cost management a challenge.
Now, J.B. Hunt is offering a third option. This dynamic pricing solution is called index-based pricing, and it provides more stability, flexibility and transparency for our customers.
Keep reading to learn more about index-based pricing and how it can create value for your business!
What is index-based pricing?
Index-based pricing takes your historical freight data and aligns it with a third-party pricing index to identify market-relevant rates for your shipments. In other words, we use a pricing index to provide you with pre-determined rates that remain the same for a certain length of time, creating pricing transparency and stability. A pricing index takes the sum of industry freight data and calculates the average cost of transportation.
The pricing index data is refreshed on a certain cadence depending on the needs of your business, meaning rates can be redetermined as often as you would like. This ensures that you’re still receiving market-relevant rates while shielding you from some of the daily pricing volatility of the spot market.
What is the advantage of index-based pricing?
We created the index-based pricing program to provide our customers with a pricing solution that can be customized to better address their unique business needs. Index-based pricing gives customers more flexibility than the previous pricing models, while still providing pricing stability. Our commitment to providing our customers with supply chain solutions that create value for their business is part of the J.B. Hunt Difference.
Check out all the other great benefits that the index-based pricing program provides:
- Transparency. By utilizing a third-party pricing index, you get visibility into how the rates are determined.
- Pricing stability and flexibility. Rates determined from the price index remain the same for a certain period, providing stability. But you get to determine that timeframe before the rates are refreshed, giving you flexibility.
- Always know the cost of business upfront. Get predetermined rates you can use to budget or compare to your current providers.
- Multiple index options. Utilizing multiple pricing index options, we have the flexibility to provide rates that best work with your budget.
- 100% freight acceptance rate. There is no preferred mode or freight type with index-based pricing. Use it on any type of load, including live and drop.
- Creates value in variable market conditions. Index-based pricing gives you the pricing stability and flexibility you need to help weather any market conditions.
- Best-in-class customer service. With every load, our goal is to provide customers with excellent customer service using our Customer Value Delivery® methodology.
Customizable Solutions
Just as we can create supply chain solutions tailored to your unique business, index-based pricing allows us to create a pricing structure that aligns with your business needs.
Ready to see how index-based pricing can create long-term value for your business? Reach out to a J.B. Hunt representative today!