# Hybrid Approach to the Cost Estimation of External-Fleet Full Truckload Contracts
## 2 FTL Cost-Estimation Models
### Dynamic Pricing for FTL Freights  
Dynamic pricing strategies take into account a variety of objective and purely subjective market and non-market factors [12; 13; 14] that actually affect or can potentially (at least in the opinion of the decision-maker) affect the offered current cost of transporting a given commodity along a defined route over a certain period of time. Dynamic pricing from one side reflects increasing dynamics in the shipping business [15], while simultaneously affecting them as well [16]. Knowledge about these factors allows for better design of the cost-estimating procedure [17], eliminating unnecessary, albeit medial and often artificially introduced, AI and ML solutions. Such an ignorant approach is strongly abused, although the knowledge possessed allows for a given issue to be solved with simple and known methods. The goal of the solution is to use the most knowledge we have about the problem, match adequate solutions and develop the simplest, computationally efficient and accurate algorithm possible. Figure 1 presents influential factors divided into main groups: contract-dependent, economic, regulatory, general and purely discretionary. Contract-dependent factors are formulated within the order request and define the main limiting parameters of FTL shipping. The commodity type defines the type of truck and its associated special equipment, ADR (I'Accord europeen relatif au transport international des marchandises Dangereuses par Route--transport with hazardous materials) or eventual driver-specific requirements or certification. The shipping origin and destination determines the route, which directly impacts the travel kilometers, time and the auxiliary costs dependent on the selected route. This aspect is closely interconnected with the required special equipment, as, for instance, in some locations the truck must include its own forklift. The dates and the time-frame for the pickup and unloading may affect the decision of which truck/driver can undertake the assignment. A similar impact is connected with travel dates, because the driver cost may differ between certain periods of the year (weekends, holidays, forbidden truck shipping dates, etc.). Finally, the contract defines the payment terms that may generate risks, which have to be mitigated by the shipping cost. Each carrier company has its own fixed costs, such as the driver's wages and all the truck costs, like its maintenance, leasing or the depreciation rates and its insurance. Apart from the company's fixed business costs, there are always some overheads and the expected/desired profit percentage, which has to be included in the pricing model. Figure 1: Dynamic pricing influential factors. The shipping business operates in the general environment. Trucks use fuel, which has a certain price, and which may significantly differ between countries and locations. Transporting goods is affected by road costs, such as highway fees, ferries and intermodal costs. Furthermore, the weather or road conditions may impact the route and the associated cost, as, for instance, the shortest road may be closed due to bridge maintenance and the detour might be much longer. Additional general economic conditions such as the inflation or unemployment rate influence the dynamic price model as well. Quite similar are the regulatory factors, like the mobility package, which has dramatically changed the European shipping market [18, 19]. Specific country-related regulations, taxation models, custom rates and all regulatory limitations and additional costs contribute to the price formulation. Quite interesting and highly varying are purely discretionary contributors. They are not directly defined or known, but may significantly change the price. Once there are no available free trucks in a certain region, the owner of a free truck may dictate a very high non-market spot price. The price during summer may differ from that in winter or during a holiday period.