Looking for ways to improve your freight purchasing? Benchmarking reveals best practice. When shipping companies know about the most attractive prices, fastest times and highest quality obtainable in a specific field of operation for their selected transport modes, they gain a valuable new perspective on their own freight purchasing activities. This strategic insight helps to save money, achieve continuous improvement and seize competitive advantage.
Three reasons why you need benchmarking
1. Market volatility
External factors such as trade conflicts, geopolitical crises and new regulations will always disrupt freight markets, yet this volatility is currently amplified by the global pandemic. We’re seeing huge, sometimes unexpected fluctuations in freight prices and capacity availability across all modes of transport: air, ocean, road and rail.
2. Negotiation complexity
Things would be simpler if shippers could negotiate with just one carrier. But of course in the real world there are many different transport service providers, often with an array of seemingly dissimilar bids and conditions. It can be difficult to negotiate with every carrier on all important decision criteria – not just price but also delivery times, transport quality and customer service levels.
3. It has to be holistic
Successful freight purchasing doesn’t occur in a vacuum. Shipping companies need to consider this activity in the broader context of optimising transport and supply chain management and enhancing all procurement processes for air, ocean, road and rail freight as well as other logistics activities.
How to find benchmarking you can trust
To understand your company’s industry-specific strengths and weaknesses in freight purchasing, you need profound knowledge of market trends, rate fluctuation, capacity availability and current best practices expressed in mode-specific benchmarks.
Before trusting any benchmarking, make sure it is based on valid methodology and insist on high levels of confidentiality to protect your own sensitive freight data. Seek out benchmarking that reflects accurate data from shipping companies of comparable size and from the same subsector, and check that carrier data has been excluded to avoid the potentially tactical, price-driving influence of transport service providers.
Here at Tim Consult we’ve been analysing the global markets for land, air and ocean freight for over 20 years. We’ve built up an enormous amount of market knowledge and appreciate the fine detail of the processes and mechanisms of global transport.