| Definition | Freight rates that fluctuate based on market conditions, demand, and supply. | Pre-determined rates that remain constant over a specified period. |
| Flexibility | Highly flexible, can adapt to market changes quickly. | Inflexible, rates are set for a fixed period regardless of market changes. |
| Cost Predictability | Low predictability, rates can vary significantly. | High predictability, rates are known and remain constant. |
| Budget Planning | Challenging due to fluctuating costs. | Easier due to fixed and predictable costs. |
| Market Responsiveness | High responsiveness to market conditions, allows for cost-saving opportunities. | Low responsiveness, potential for overpaying during low-demand periods. |
| Negotiation Complexity | Requires continuous negotiation and monitoring of market trends. | Simple, as rates are fixed and agreed upon in advance. |
| Risk Exposure | Higher risk due to potential for rate spikes. | Lower risk, as rates are known and fixed. |
| Supplier Relationship | Dynamic interactions, frequent negotiations can strengthen or strain relationships. | Stable interactions, fewer negotiations needed, potentially stable relationships. |
| Volume Commitments | Can negotiate based on varying volumes and needs. | Often requires volume commitments to secure favorable rates. |
| Administrative Burden | Higher, due to continuous rate monitoring and frequent negotiations. | Lower, with fewer rate adjustments and negotiations. |
| Cost Efficiency | Potential for cost savings during low-demand periods. | Cost efficiency depends on market conditions at the time rates are set. |
| Market Stability Impact | Can lead to market volatility due to fluctuating rates. | Contributes to market stability with consistent rates. |
| Data and Technology | Requires advanced data analytics and technology for market trend analysis. | Less dependent on advanced technology and data analytics. |
| Strategic Fit | Suitable for companies with flexible logistics strategies and risk tolerance. | Suitable for companies prioritizing cost predictability and stability. |
