From a financial standpoint, transportation cost analysis remains focused on determining the value of the resources used to execute a given shipment and goes well beyond benchmarking. The total value of resources, man-hours, construction, equipment, maintenance, fees, and other costs must be accurately estimated for expense prediction to be effective. Without clear budgeting and cost-prediction measures, the transportation network will be unable to accurately plan for increases and decreases in expenses. Moreover, this kind of analysis does not focus on who ends up paying which expenses in the end. Rather, it focuses on establishing standards for all costs that come with all loads and how those costs move over time. Let’s take a closer look at how such an analysis provides more actionable insights that help shippers find and leverage meaningful capacity.

The challenges of limited transportation cost analysis

Without a clear picture of what money is coming in and going out of the supply chain, common challenges and disruptions can have an even greater impact. Some of the most common issues that arise from a lack of accurate transportation cost analysis and data tracking include the following:

• Inability to track data and respond to it in real-time. 
• Lack of visibility and insight into common observable costs. 
• Lack of planning to plan for rises in fees and expenses.
• Poor net revenue per truck (NETREV) in the fleet. 
• Limited data sharing within the chain.
• Inability to secure profitable loads and orders.
• Difficulty in executing the most profitable moves.
• Failure to hold carriers and brokers accountable for shortfalls or errors in billing practices.
• Ongoing wasted resources.

Together, these challenges demonstrate why transportation cost analysis is critical to keeping the supply chain operational and functioning at a profitable and scalable level. But it’s also important to think about how a comprehensive analysis amplifies basic benchmarking capabilities.

True transportation cost analysis goes well beyond benchmarking to analyze, monitor and forecast trends that can be used to the shipper’s advantage

A trend that continues among shippers nationwide is better monitoring and utilization of analysis within the supply chain. Knowing when fees tend to rise, and charges commonly fluctuate can help shippers know when and how to secure the best freight rates. The key focus of transportation cost analysis remains an important component of supply chain and logistics planning. Combining common freight KPIs with cost analysis and tracking can give management a clearer picture of what path to take for short-term and long-term success. And if shippers know more about how carriers price freight, they are better able to identify those trends based on market signals and pre-empt carrier pricing changes. 

Consider this fact. According to the Small Business Chronicle, “Finding a reliable and affordable carrier isn’t a one-time scenario. You could be missing out on competitively priced options if you’re not constantly building relationships with carriers and getting quotes for different services. Failing to diversify your carrier relationships also puts your company at high risk of being stuck in a lurch if your sole carrier suddenly goes out of business. You’ll definitely lose money if you cannot keep your customers happy by delivering their products, so poor carrier diversity puts you in a lose-lose position.” As a result of better freight data application, it’s easier and more effective to find such carriers while tendering loads at proper rates that are less likely to incur rejection and move more efficiently.