Can AI Negotiate The Best Freight Rates?

California-based Pactum, a company that offers automated software to assist negotiations, just raised $20 million in funding per Bloomberg. 3CV led the round, while Maersk Growth and others followed.

THERE ARE MANY REASONS WHY AN AI SYSTEM HAS AN ADVANTAGE IN NEGOTIATION.

For example, an AI system might be able to analyze market data and past negotiation history to come up with personalized offers that are more likely to be accepted by the other party. Moreover, this helps both sides reach deals more quickly and efficiently. It potentially leads to cost savings and improved performance for the supply chain as a whole.

Why do companies like Pactum see more investment interest?

Martin Rand, CEO and Co-founder of Pactum, says that algorithms, not humans, would better handle around 80% of commercial deals.

Furthermore, he notes that “People are needed to manage strategic deals which machines cannot, but such complexity is very tough because people cannot think in a multidimensional space, but machines are made for that.”

On top of that, recent disruptions in the market have shown the value of fast contract rewrites. People can manage and analyze a limited number of variables. Other reasons logistics tech companies like Pactum are seeing an increase in private investment are changing ports, unpredictable demand, and capacity imbalances. Unexpected events force change.

Pactum goes above expectations in pilot.

In a recent pilot program with Walmart International, 64% of the 89 participating suppliers reached deals using Pactum’s software. This was far beyond the expected 20%, according to Harvard Business Review.

So, we’ll continue to see companies like Pactum play a larger role in negotiating freight rates. It will be interesting to see how it shapes the future of the supply chain.