5 Reasons Why You Should Benchmark Your Carriers
There's a sage old adage that goes, "If it ain't broke, don't fix it" but adhering to that can be as timeless as a broken watch. A solution that may have fit at one point in your company's growth may not be the right solution today, tomorrow, next quarter, or next year. Freight is a rapidly evolving market that is seeing changes in capacity, growth, routing, service, and technology. All of these components combined are what serve to make a successful, efficient, cost-effective, and optimized supply chain. But how does a company know what is and isn't broken? That's why we benchmark.
Here are 5 reasons you should be benchmarking your carriers:
Growth
How has your company grown since the last time you sat down at the table to
look at numbers? Is your freight spend the same today as it was when you
selected your carriers? The partner who could handle 10 LTL shipments a month
along 2 lanes likely isn't the same one that could best handle 10,000 FTL
shipments along 200 lanes.
On the other hand, perhaps you've gotten smaller, nimble, and niche. If that's the case, the reverse applies. Maybe that global carrier who moved mountains in the past no longer sees you as a priority and it's time to look towards options more geared to your overall size.
Additionally, how has your demand changed? Are you now drop shipping, plus going to warehouses, as well as distribution centers? What are the demands and needs of your customers now? Leverage your growth to bolster every rung in your supply chain. Afterall, you're only as strong as your weakest link.
Capacity
Trucking, air, rail, and ocean freight are all flux markets that are controlled
by capacity. How much empty space is in each one of those ships, trains,
planes, and automobiles ends up dictating where the market rates fall. Both the
trucking and ocean freight industry have seen rapid consolidation as well as
capacity issues. These conditions create openings for shippers to further
maximize their supply chain optimization by utilizating services with the most
space, lowest rates, and best service by becoming a shipper of choice.
Rates
The big R word. Rates. It's unavoidable and for better or worse is almost
always the first number looked at when shippers are selecting service partners.
So, when is the last time you reviewed your rates? Year-over-year capacity,
consolidation, and fuel rates help to set the market and while some modes of
transportation have seen only incremental increases others have seen major dips
and drops.
When benchmarking carriers it's important to review rates across all lanes vs the market. A box to Shanghai that cost $2200 just 4 years ago could be $1200 in today's market. All carriers aren't created equal. The provider who has the best rates to one region may not offer the same value to another.
Lastly, it all ends on the bottom line. How often have you received a quote only to be hit with a laundry list of accesorials, surcharges, GRIs, etc, etc, etc? Invoicing that would make your cable company embarrassed . With proper benchmarking you will learn with the utmost transparency if these charges are fair and if they're not, a great freight management firm can negotiate most if not all of them away.
Technology
Gone are the days when offices hummed and buzzed with the cacophonous
symphony of fax machines and dial-up modem connections. Now many of us have an
on-demand work force who need cloud-based access to real-time event
notifications while in the field on their mobile devices. They need freight
visibility across multiple lanes in a multitude of nations.
Many carriers are aware of this and great strides and a tremendous amount of capital has been poured into technology to make that happen. What are your current service providers doing to bridge this technological gap and what work are they doing to future-proof your supply chain? Now, more so than ever, is the time to make sure that your carriers’ capabilities and plans for the future coalign with your company's.
Compliance
Regulations are changing ever year across air, sea, and land. SOLAS was
enacted on the oceans and last year the Electronic Logging Device (ELD) mandate
became the rule of the road. Each one of these changes creates new challenges
for shippers, brokers, forwarders, and carriers. Compliance and reasonable care
rests firmly upon the shoulders of the shipper. It's imperative that you audit
your partners before Customs & Border Protection audit your company.
Remaining complaint not only means the reduction/elimination of governmental fines and delays but it also ensures that your partners are doing their job. New regulations can also have new costs associated to them. When benchmarking your carriers, it's important to look at what they are and aren't doing as well as how much they may be charging for any new regulatory services. Compliance is something that should never be assumed.
Ready to learn more about benchmarking your carriers? Reach out to Aborn & Co. for a free consultation.
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