Optimizing Freight Spend: What top shippers are doing to look beyond cost

January 13, 2025

Freight procurement is a complex puzzle, and understanding how to optimize costs is just the starting point. In this educational discussion, we dive deeper into the strategies top shippers are using to balance cost with other critical objectives. Amy Elgart, our Group Product Manager, explains how shippers leverage business rules—known as constraints—to fine-tune their freight strategies and achieve their unique business goals. 

About Amy Elgart

Amy Elgart is our Group Product Manager, responsible for meeting with our top shippers to get a pulse on the problems they face every day


Question 1

Let’s start simple. How do shippers “optimize” their transportation spend?


There are two main ways to approach it:

  1. Lowest Cost Scenario: This one’s straightforward—allocate as much volume as possible to the lowest-cost participant. If they can’t cover it all, the next lowest-cost participant steps in, and so on.
  2. Rule-Based Scenario: Same idea, but with extra layers. Here, you apply business rules (we call them constraints) to decide who gets what. These rules might include prioritizing certain carriers, meeting service requirements, or spreading volume across participants. EmergeAI takes this a step further by using machine learning to analyze the most efficient allocation of volume based on your rules. It suggests the optimal carriers, taking into account factors like cost, capacity, and service levels, helping you make data-driven decisions while saving time on manual assessments.


Question 2

Why wouldn’t you want to just always use the lowest cost possible?


It’s actually rare for our shippers to only focus on Lowest Cost. Most use a hybrid approach: run a Lowest Cost Scenario first, then layer in rule-based constraints to fine-tune the results because each shipper has unique needs for their business that they need to account for like maintaining relationships or achieving high levels or service.


Question 3

How do constraints help you build a comprehensive strategy?


Constraints let you tailor your freight decisions to fit your business needs. They help you go beyond just cost savings and focus on priorities like working with specific carriers, meeting certain service standards, or spreading your volume across multiple providers. Think of it like setting the rules to make sure you're getting exactly what you need out of your freight procurement, whether that’s keeping a certain carrier involved or balancing capacity more effectively. Constraints help you keep everything in line with what you're trying to achieve.

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Question 4

So constraints are like guard rails to make sure you are getting the best price given a bunch of requirements?


Yes, you might create a rule to “favor incumbents” or “only award lanes to carriers offering special services.” Which might mean paying above the lowest rate on some lanes, but worth it for the strategic benefits.

Here’s the thing: Analyzing these constraints would be really complex if you were doing it with spreadsheets and emailed responses. This isn’t a problem with ProcureOS because all the responses are in one central location and EmergeAI guides you through building the constraints, helping you quickly identify and fix any issues, so everything works smoothly.

Constraints built with EmergeAI pass validation, meaning they have to work with your data and other rules. If something doesn’t add up—like asking for two carriers on a lane that only got one bid. Emerge guides you through this process, helping you quickly identify and fix any issues, so you can trust that your proposed goals will actually work.


Question 5

Any tips for building constraints?


Definitely. The key is planning ahead:

  • Start early: Emerge simplifies RFP event setup with a process designed to guide you every step of the way. Drawing from our experience setting up thousands of RFPs of all sizes, we’ve built an easy-to-follow framework—complete with pre-built questions and templates—so you can quickly define your business rules and lane details without the guesswork.
  • Use the right data: Emerge automatically includes the most commonly requested data for RFP events. Plus, if you need something extra, you can easily add custom fields to make sure you have all the info you need for your constraints.
  • Run a baseline first: Emerge lets you generate the Lowest Cost Scenario with just one click, giving you an immediate view of your minimum spend without any business rules in place. This makes it easy to compare against your rule-based scenarios. 

Also, filters are your best friend. Let’s say you want to only award lanes to incumbents with a grade above 90%. You can layer those filters to make sure the rule applies exactly where it should.


Question 6

What kind of constraints are shippers using the most?


Over the past six months, we’ve seen three big ones:

  • “Only award to specified participants”: Usually used for prioritizing incumbents or carriers with unique capabilities.
  • “Allocate volume”: Popular for high-volume lanes to spread out risk.
  • “Favor specified participants”: A great way to reward loyalty or maintain strong relationships.

Some shippers get more specific, like awarding more participants on high-volume lanes or setting rules for special services like white-glove delivery.


Question 7

Any final advice for shippers looking to optimize their transportation spend?


It’s all about balance. You’re trying to get the best cost while meeting service goals and keeping relationships strong. Start with a baseline, know your rules, and validate your setup to make sure everything runs smoothly.

Ready to reinvent your procurement strategy?

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