Sale! Airfare, 98% off!

Who wouldn’t take advantage of such a deal? While not an everyday occurrence, the mispriced fare was actually offered when a $4,000 United Airlines flight was made available for $79.  This specific “mistake fare” allegedly occurred due to a miscalculation between the Danish Kroner and British Pound that was built into a computer software algorithm, but nevertheless demonstrates what can happen when inaccurate data is used in pricing and management systems, including parcel shipping.

The incidence of erroneous automated pricing has only increased since this $79 “deal” was first discovered, to the point where online entrepreneurs (DollarFlightClub, Fly4Free, and others) have embraced the concept in order to take advantage of such occurrences. Today, such errors are often attributed to recurring variables, such as customer demand, seasonality, competition, surcharges, and operational costs. They can also occur, however, when imperfect data models create unexpected results, due to software malfunction, coding error, or miscalculations in the complex algorithms that determine pricing. Such errors can occur beyond passenger travel, affecting shipping and storage costs, and related indicators of value to logistics managers. 

Technology Errors: Case Studies in Complex Systems Failure

In the digital age, transportation pricing relies heavily on complex algorithms and sophisticated revenue management systems. These networks, while generally robust, are not immune to mistakes. A single coding error or system malfunction can inadvertently slash prices, creating a window of opportunity for savvy buyers. To demonstrate the impact of accurate decimal placement, in 2015, Alitalia faced embarrassment when a data error caused the airline’s website to display business class tickets from Toronto to Cyprus for a mere $39. The glitch, attributed to an error in currency conversion, led to a surge in bookings before the issue was rectified.

Elsewhere, behind the scenes, human intervention can play a pivotal role in setting and updating transportation prices. The vast datasets, intricate pricing structures, and constant updates required by revenue management systems increase the likelihood of human error. A simple oversight, miscommunication, or data input mistake can cascade into significant discrepancies in pricing. As an example, in 2018, Hong Kong Airlines mistakenly listed business class tickets from Los Angeles to Vietnam for around $600 instead of the usual $6,000. The error, traced back to a misplaced zero in the system, attracted a surge of bookings, again before the mistake was rectified.

Dynamic pricing and currency fluctuations are also critical to logistics management. Transportation prices are not static; they fluctuate based on demand, supply, and various external factors. Dynamic cost models adjust pricing in real-time, sometimes leading to unintended consequences. Currency fluctuations, in particular, can introduce data disparities in pricing, creating opportunities for customers to exploit.

The Unseen Disruptor: Bad Data

In an evidence-based business world, data drives decisions and analytics reign supreme. The transportation industry is no exception to the transformative power of technology. The growth of infamous “mistake fares” aptly demonstrates how data quality can significantly effect service quality, highlighting the value of analytics tools in mitigating such challenges in both passenger travel and parcel shipping. Mistake fares, resulting from technology or human errors in revenue management or scheduling systems, have the potential to create chaos. These errors, often a result of a simple misplaced decimal point or software miscoding error, can lead to substantially reduced or increased prices, where the repercussions can be profound.

Insights Unveiled: The Power of Analytics

Enter the domain of analytics, a resource that has the power to transform the situation surrounding pricing errors. Analytics tools, driven by cutting-edge technology, play a pivotal role in deciphering patterns, detecting anomalies, and providing insights to businesses. In the context of transportation, these tools can be the difference between a minor error and a full-blown crisis.

Data quality can be the first line of defense against errors, as it provides the foundation for effective analytics. The ability to distinguish between legitimate fluctuations and erroneous pricing requires a sophisticated understanding of data and analytics tools.  Armed with reliable information and advanced algorithms, managers can quickly identify aberrations and alert their companies to potential mistakes before they escalate.

Efficiency Soars with Good Data and Analytics

The shipping industry, much like passenger aviation, relies heavily on logistics expertise as well as on efficient operations. Analytics programs, equipped with real-time tracking and predictive data modeling, have revolutionized the way goods move across the globe. By analyzing historical shipping data, these tools optimize routes, reduce delays, and ultimately lower costs.

In an era where margins matter, analytics emerges as a cost-effective ally for businesses across the transportation sector. By providing actionable insights, these tools empower businesses to make informed decisions that streamline operations and optimize resource utilization.

Beyond Crisis Management: Proactive Analytics

Rather than merely reacting to mistakes, good data and analytics tools empower organizations to adopt a proactive stance. By continuously monitoring data streams and applying predictive analytics, companies can foresee potential errors and preemptively implement corrective measures, ensuring a smoother and more resilient operation. As technology continues to evolve, the relationship between analytics tools and service quality becomes even more critical. Embracing these innovations is not just a matter of survival; it’s a strategic imperative for businesses navigating the constantly shifting currents of the modern market.

Data Quality and Service Delivery

Managing the interplay between data errors, mistake pricing, and analytics is a fast-emerging science, where technology meets turbulence. By leveraging the insights and data metrics provided by industry-specific analytics solutions, managers are better equipped to not only discover mistakes but also chart a course for greater efficiency, lower costs, and enhanced service quality. For example, the LJM web portal for parcel shippers offers a GEO(graphical) Heat Map allowing businesses to visualize, analyze, and manage their shipping behavior domestically and internationally. The GEO Heat Map is part of a comprehensive range of reporting and analytics tools provided by LJM Group. Our automated solutions include monthly parcel invoice audits and TruCost reporting, both of which further empower businesses to utilize data and reduce shipping costs.

Data quality and analytics have emerged as powerful management compasses, guiding the logistics industry. LJM’s commitment to providing insightful metrics through advanced technology is not just a service; it’s a strategic investment for the success of our clients. And, as we manage the complexities of modern logistics, the fusion of data and analytics is not merely a trend; it’s a transformative force propelling businesses towards new heights, relying on the caveat:  You can’t manage what you can’t measure.

Sources

Lupini, C. How To Find Mistake Airfares And Save Hundreds. Forbes.com, September 2023:

https://www.forbes.com/advisor/credit-cards/travel-rewards/how-to-find-mistake-airfares-and-save-hundreds/

Genter, J. What Is A Fuel Surcharge?  November 2022. Forbes.com: https://www.forbes.com/advisor/credit-cards/travel-rewards/what-is-a-fuel-surcharge/

​Lucker, J., Hogan, S., Bischoff, T. Predictably inaccurate: The prevalence and perils of bad big data. Deloitte Review, Issue 21. July 2017: https://www.deloitte.com/global/en/our-thinking/insights/deloitte-insights-magazine/issue-21/analytics-bad-data-quality.html

Bansal, M.  Flying Blind, How Bad Data Undermines Business. Forbes Innovation. October 2021: https://www.forbes.com/sites/forbestechcouncil/2021/10/14/flying-blind-how-bad-data-undermines-business/?sh=5c76c23e29e8

Genter, K. The Comprehensive Guide to Canceled Mistake Fares. November 2018: https://thepointsguy.com/guide/the-comprehensive-guide-to-canceled-mistake-fares/