OnTrac is testing a new pricing model designed to turn available capacity across its parcel network into potential savings for shippers, as the carrier looks to become “much more customer centric.”
The Dynamic Savings program is currently being piloted with selected customers and is designed to offer lower shipping rates when OnTrac has available capacity.
The initiative, announced Monday, uses technology from parcel pricing platform Onrout and operates as an additional pricing option when a shipper compares existing contracted carrier rates through its rate-shopping process.
Under the system, a shipper first identifies the lowest available rate through its rate shop. It can then submit its target price and package details through OnTrac’s Dynamic Savings platform.
The technology evaluates current network conditions, as well as the package’s characteristics, origin and destination. It then either generates a shipping label at the shipper’s target price or informs the customer that the requested price cannot be met.
A different approach to dynamic pricing
Major parcel carriers such as FedEx and UPS have long used surcharges to adjust prices dynamically during periods of high demand. OnTrac says its approach is different because the objective is to use network availability to generate savings rather than simply increase prices.
“With those programs, the price only ever goes up,” said Vijay Ramachandran, OnTrac’s vice-president of marketing, product strategy and marketplaces, in an interview with Supply Chain Dive.
Ramachandran said OnTrac is currently rebuilding its entire pricing and billing infrastructure, giving the company greater flexibility in determining how and where it can adjust pricing for customers.
“We’re rebuilding our entire pricing and billing stack right now, and that unlocks our ability to be a lot more agile in the way we price for our customers and where we can meet them where they are,” he said.
Pricing has become an increasingly important issue for parcel shippers as delivery costs have risen this year, including as a result of higher fuel surcharges imposed by FedEx and UPS.
At the same time, alternative parcel carriers continue to expand their share of shipment volumes and invest in their capabilities as they compete for customers.
“I think people are really finally frustrated enough with UPS and FedEx,” said Mike Brown, OnTrac’s CEO. “They’re absolutely looking where they might not have ever looked before.”
Pilot expands in 2027
OnTrac’s Dynamic Savings program remains in its pilot phase with a limited group of customers. Testing with additional shippers is scheduled to begin in Q1 2027.
Participation comes with existing requirements. Shippers must already have pickup services with OnTrac and meet minimum weekly volume thresholds. The Dynamic Savings program is intended specifically for incremental volume above those minimum commitments.
Brown said the initiative forms part of a broader effort to make OnTrac more customer-focused, a priority he has pursued since moving from the CFO position to CEO in January.
The carrier has also developed a “perfect delivery rate” that combines multiple data points collected throughout the shipping process. Those measurements range from a scan when a shipment arrives at the origin facility to visual proof of delivery.
Brown said OnTrac plans to make this information available to shippers through its customer portal on a near-real-time basis.
More network capacity coming
OnTrac also expects to significantly expand its network capacity during 2026.
Brown said the company will add between 25% and 30% more capacity this year, with a substantial portion of the additional space directed toward its Northeast operations.
Earlier this year, the carrier announced the opening of three facilities in Pennsylvania, Massachusetts and Texas.
Further expansion is planned for 2027. Brown said OnTrac expects to have a capacity expansion plan ready by January or February next year, with the strategy focused primarily on service and quality.
“I fully expect we will have a plan for 2027 expansion in terms of capacity, really focused around service and quality, that we will have ready to go [in] January, February next year,” Brown said.
