13 Trimble Transportation Bid Don’t Bet Risk/Reward Ratio Your investment portfolio (your awarded lanes) will likely consist of a mixture of high-risk, high-reward and low-risk, low-reward contracts. The actual makeup of this mixture will be determined by your organization’s identity and what ambitions you have for the future. Establishing contracted rates gives you a lower-risk network design. If you prioritize contracted rates entirely, you lose the ability to capitalize on premium spot rates, but at the same time you have greater planning ability. Industry Characteristics Diversification Return Like any investor, you should bid with a solid understanding of the shipper’s industry, as this will undoubtedly affect their behavior, and therefore the rate you put forward. Some businesses, like retail, are more cyclical, and the holiday season comes with an expectation that you’ll be able to increase capacity. Other industries are more stable and consistent in their demand for your capacity, which may or may not align with your network needs. Seek out those that match your organization’s ambitions. As the old saying goes, “don’t put your eggs in one basket.” While in the trucking industry you may be inclined to put at least some of your eggs in the same basket, it’s generally a good idea to diversify your network, as this helps to minimize risk. Diversifying doesn’t necessarily mean spreading your resources evenly, however. Identify which customers represent how much of your total business revenue. For example, finding how many customers represent 20% of your total business may reveal that you rely too much on a small number of customers, or it may tell you that you need focus a bit more on a select few customers that you do well with. When working to tune your trucking network, it’s important to understand the impact your decisions have. A rate increase of just a few pennies can increase annual revenue by hundreds of thousands of dollars. Finding the right shippers that enable you to operate efficiently and at the optimum rate is a process that greatly benefits from constant consideration of rates of return.