Tracking the right key performance indicators (KPIs) is essential in all industries. Unfortunately, the list of possible transportation KPIs can make figuring out the most valuable metrics troublesome. As reported by S.L. Fuller of Transport Dive, “every company in every industry has a checklist of key performance indicators, ranging from EBITDA to growth metrics. ‘But if that’s all you measure, you’re just holding your company up to the same mirror-like everyone else, and there is no chance of differentiation,’ Erich Fischer, principal at Deloitte Consulting, said in an email.” There’s much more to tracking KPIs and how each company applies that information to unlock supply chain optimization. Let’s look at 10 transportation KPIs freight market participants should measure.
Depending on the freight management segment, tracking the average revenue yield per tender is among the most crucial transportation KPIs. This metric is valuable for carriers, LSPs, brokers, forwarders and even shippers. After all, shippers still need to know the profitability and expense reports for all shipments.
Tracking empty miles driven is another leading transportation KPI. Recognizing deadheads and maximizing those opportunities with filled trucks are critical components of a successful supply chain strategy.
Comparable to tracking deadheads, measuring the asset utilization across all fleets, equipment and freight management parties provides insight into overall performance. It further improves efficiency by revealing areas where capacity can be reallocated to maximize profitability.
Loading and unloading time and dwell time play into the efficiency of dock management as well. Among transportation KPIs, tracking loading and unloading time in conjunction with dwell time provides insight into the trends and potential problems with existing pickup and drop-off locations. Furthermore, following the dock’s average time helps better planning for delivery or departure schedules and avoiding the issue of dwell time in the first place.
Why freight forecasting
is essential for determining
Fuel efficiency is another leading transportation KPI. Since fuel costs are the second-highest cost for carriers, behind driver wages, maximizing fuel efficiency with the most optimized route and mode selection is essential. Of course, that all depends on being able to capture fuel costs data as well.
Freight management parties should further track adherence to the hours-of-service (HOS) regulations. While these regulations are primarily meant to improve drivers’ working conditions, monitoring adherence, particularly with owner-operator fleets, can go a long way in reducing a company’s liability for such compliance violations.
Tracking labor productivity is a multi-faceted KPI. As transportation KPIs have evolved, companies can better track and measure cost and profitability across all loads. While this plays into tracking the average revenue per load, tracking labor productivity by looking at all activities and recognizing which staff could secure more bookings, submit more tenders, or otherwise engage in more profitable activities can lead to improvements in back-office management. Also, this translates into increased employee satisfaction, increased employee retention, and better customer experiences. After all, those factors all play into the customer retention rate.
Tracking the retention rate comes from the following formula:
Retention Rate = ((Total Number of Customers Over a Set Period-The Number of New Customers Acquired )/Customers at the start of that period) X 100
It’s also vital to track how those metrics evolve year-over-year, month-over-month, and week-over-week. That’s the bulk of what goes into measuring supply chain profitability and growth.
Tracking transportation KPIs further includes a host of freight claims metrics, including the percentage of invoices containing errors, total accessorial charges assessed, percentage of late arrivals or departures, damaged freight, and more.
That information gives rise to other metrics designed to measure the profitability or reason for such claims, mainly when those issues derive from late or missed deliveries. For instance, mode selection versus optimal use and out-of-network shipments may result in late arrivals or freight refusals by customers.
Regardless of what metrics a company wishes to track, the top transportation KPIs will help build a more profitable, lucrative supply chain. At the same time, it all depends on gathering the right data and ensuring it’s reflective of actual market conditions. Yes, it’s about getting access to a global rating resource with granular capabilities, such as FreightWaves SONAR. Learn more about the value of freight forecasting and market data by signing up for a FreightWaves SONAR demo online today.