Achieving Profitability with AI Engines

The Challenge

As an asset-less logistics and freight forwarding company that sells shipping containers to customers in Europe and Asia, our customer faced critical challenges that hindered their ability to be profitable. Their company struggled with three primary issues.

The first major challenge was determining the optimal number of shipping containers to purchase and knowing how many containers were available to sell to their manufacturing and retail customers. Purchasing too many shipping containers resulted in penalties for returning the excess inventory. While purchasing too few containers led to paying premium prices to meet customer demands or missing sales. This balancing act created financial strain, operational inefficiencies, and customer churn.

The second major challenge was difficulty pricing their services accurately to meet demand, remain competitive, and be profitable. Shipping container prices are inconsistent and vary drastically, sometimes even doubling. The fluctuating pricing of the shipping container market and the company's inability to determine when to adjust prices to meet or create demand compounded their financial challenges.

The third major challenge was scattered and disconnected data sources, making it difficult to track critical performance metrics and capture valuable insights. They were unsure of how many shipping containers were available to sell and whether they were losing money or missing out on potential revenue. Although they knew they were losing substantial profits, they couldn’t pinpoint where or how much. Disjointed IT systems and data exacerbated the issue by preventing insights and action on their most important business metrics.

The AI Solution

To help address these challenges, this logistics and freight forwarding company partnered with PrimeAI to deploy advanced AI engines for Demand Planning and Pricing Optimization.

PrimeAI’s Demand Planning AI engine analyzes past data, trends, seasonality, and patterns to better predict how many shipping containers the company should buy. This insight helps the company avoid penalties for acquiring too many containers and extra costs for paying the on-spot price for more containers. By better predicting customer demand, the company can maintain optimal inventory levels, ensuring they meet customer needs efficiently without incurring additional costs.

To tackle their pricing issue, PrimeAI’s Pricing Optimization AI engine evaluates market conditions, competitor prices, and customer behavior. This analysis enables the company to achieve dynamic pricing and adjust prices in real-time to maximize margins across hundreds of trade routes. The AI-driven pricing strategies keep prices stable and competitive, reducing customer churn and increasing revenue. By offering consistently competitive pricing, the company can attract and retain more customers.

PrimeAI also helped address the company's disparate data problem by integrating different data sources into a centralized cloud data warehouse and providing intelligent buying and selling dashboards to their Procurement and Sales organizations. This unified view provides a comprehensive view of shipping container availability and financial performance. With accurate and centralized data, the company can make better decisions, identify revenue leakage, and optimize operations effectively. They can now see exactly how many containers they have, where they are losing money, and how to stop it.

The Results

After just 4-months, this logistics and freight forwarding company saw substantial impact from their AI engines for Demand Planning and Pricing Optimization. With PrimeAI technology, they identified revenue and cost-saving opportunities worth $1 million per month, significantly improving their financial health and transforming their losses into profits.

The new AI-powered profitability and operational stability enabled the company to raise capital, fueling further business growth. Enhanced data integration and insights streamlined their operations and decision making, helping them improve their inventory processes. While a consistent and competitive pricing strategy reduced customer churn and strengthened relationships with their manufacturing and retailer customers.

Looking forward, this company is well-positioned for continued growth by unlocking the power of AI and achieving transformational analytics in their business.