Within the transportation and shipping industries, one of the most challenging aspects of freight management and logistics comes down to knowing what to charge, when to charge it and what transport lines to use. However, a lack of freight market intelligence can lead to assumptions and spikes within total landed costs. While some deviations are standard, too many will inevitably cost customers and tarnish your ability to maintain a profitable company. Fortunately, transportation benchmarking can help you track trends and freight rates among the competition across several markets, so you can remain competitive while still turning a profit and avoiding the pitfalls associated with freight management during times of uncertainty.
Why freight management parties need transportation benchmarking
Transportation benchmarking is needed for several reasons. According to Supply Chain Digital: “Driving cost savings in today’s fast-moving supply chain industry has become quite a challenge in light of unforeseen events, fluctuating rates, and ever-changing supply-demand dynamics. For you to better manage costs, determine the best possible trade lanes for each shipment and drive savings, freight rate benchmarking has become a necessity.”
That holds true for any company dealing with shipping and logistics – from the global giants to the small local shipper. Therefore, transportation benchmarking practices are becoming more and more prevalent within the shipping industry. Simultaneously, more companies are seeking ways to identify opportunities for improvement and squeeze additional efficiency from back-office processes. That’s where benchmarking can add the most value.
Benchmarking against peers ensures tendered loads and acceptance rates reflect market conditions
Benchmarking rates is one practice that will make it easier to cut costs and save money. With benchmarking you can also gain valuable insights, understand more clearly the competitive threats that exist, and are able to identify new business opportunities more quickly. When transportation benchmarking is adequately implemented, freight brokering becomes much more accessible, and the entire process is more streamlined and manageable. Essentially, brokers and logistics service providers (LSPs) have a faster method to find the most lucrative loads and secure bookings by offering competitive rates. Remember that the best way to stay competitive is to provide the best service at the best rates. Benchmarking against peers, whether brokers, shippers, LSPs, or carriers, allows companies to maintain that advantage without undercutting profitability.
ADDITIONAL TIPS TO BENCHMARK TRANSPORTATION AGAINST PEERS
Finding the best transportation benchmarking strategy means learning how to collect and apply freight data to derive actionable insights. Some leading best practices to achieve those goals include:
- Connect your supply chain with integrated systems, using API and EDI where appropriate. Making your choices based on data, real-world statistics and real-time reports is the best way to maintain the advantage. Freight market intelligence is critical for the overall growth and sustainability of any company.
- Make decisions based on both origin and destination buying power and strength. Every step of the process must be carefully considered, but the origin and the final destination are the most impactful of them. Smart decisions here create a ripple effect that can impact the entire shipping and transportation process.
- View national and global rate averages for all modes of transport that are utilized. Transportation benchmarking is most impactful when you have data across multiple modes and for more extended periods. Local, national and global trends can play into how you set yourself up to stand against your competitors.
- Tailor insights based on your mix of lanes, carriers and supply chain freight management party relationships. Diversifying your understanding makes you more informed, which is always desired when trying to stay ahead of the competition. Benchmarking and tracking make this easier by analyzing market trends and easy-to-recognize developments that will create the most profitable business opportunities.
- Use transportation benchmarking to understand the nature of freight transportation markets. This, in turn, makes it possible for shippers to operate and communicate more effectively. The process also helps ensure products are moving at the best speed for the client’s rate.
DEPLOY AN ADVANCED DATA MANAGEMENT AND TRACKING PLATFORM TO REAP THE REWARDS
The best route for advancement within the supply chain depends on access to data. Data fuels all insights and empowers business leaders with informed decision-making capabilities. With that in mind, leveraging a comprehensive freight forecasting resource to improve and enable peer transportation benchmarking is critical to measure your service and company’s value. And it all begins with getting on the right track with the right resource. Request a FreightWaves SONAR demo online today.