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TrueRate+ is Transfix’s attempt to battle broken trucking contracts

Tzeng notes that cost-plus aspect isn’t new, but sharing pain and profit is

Tony Tzeng, chief product officer at Transfix, being interviewed by FreightWaves' Rachel Premack. Photo: FreightWaves

CHATTANOOGA, Tenn. — Transfix used the opportunity of a fireside chat at FreightWaves’ F3: Future of Freight Festival to discuss its TrueRate+ program, which attempts to share the volatility of the market among shippers and the company.

In a discussion with FreightWaves’ Rachel Premack, Tony Tzeng, the chief product officer at Transfix, said the basic idea behind TrueRate+ is a cost-plus program but with more of a sharing aspect. It was rolled out in the past few months, Tzeng said.

“What we are doing is really making sure the incentives are aligned,” Tzeng said. “It sort of feels like it allows us to address traditional issues in cost-plus programs and the pain points.”

The formula is relatively simple. A contract price between Transfix and a shipper will be tied to some sort of index, possibly one created by Transfix but with transparency to the shipper. If over the course of the contract the cost of moving goods increases, Transfix will assume 70% of the higher costs, with the shipper getting hit with the remainder. 

If the cost of shipping falls, which would normally fully benefit a 3PL in a traditional brokerage relationship, the shipper gets 70% of the savings.

TrueRate+ is part of a broader effort, Tzeng said, to combat the weakness of contracts that are regularly broken if market conditions shift. “Why do folks break contracts?” Tzeng said. “It usually has to do with rates not matching up with what is in the contract terms.”

The goal is that a contract tied to a moving index with pain and profit sharing will “take out a little bit of the motivation of breaking contracts,” Tzeng said. It would also help eliminate the need for a shipper to constantly send out new RFPs while chasing the movement in volatile markets. 

In his discussion on the FreightWavesTV stage at F3, Tzeng said TrueRate+ is part of a broader effort to build an “end-to-end intelligent freight platform.” That sort of platform is “thinking more in terms of the pain points and problems that need to be solved.”

“How can be we bring together some of the insights in a more cohesive manner?” Tzeng said of the company’s goal.

And part of that is meeting driver concerns about “app fatigue.” “They use one app to get a load, a different app for messaging and one to find places to eat,” Tzeng said. “What you’re seeing at this conference is a lot of companies are trying to bring more of these experiences together so you don’t have as much cognitive load.”

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.