The pricing landscape of shipping is volatile in the current climate. There have always been complexities to the price comparisons of the same products between carriers, and the post-COVID world has further compounded the issue. Today, more than ever before, freight visibility is extremely important for shippers.
Every shipper needs the ability to cut through the haze in comprehending the all-round capabilities of a carrier. Furthermore, they will need to rationalise offers, contracts and proposals from carriers, making real-terms comparisons between them regarding the services provided and the costs involved.
Key areas of freight spend visibility
In order to meet the changing needs of the times, shippers need to know what they should be looking at and have complete spend visibility. Here are some of the crucial aspects of spend that shippers need to be looking at:
Surcharge types
There are numerous surcharge types with carriers. This matter is further complicated by the fact that these surcharges are rarely consistent between carriers. When trying to compare carriers, this can make it very difficult to evaluate pricing.
In order to obtain full visibility, shippers must comprehend the meaning of every surcharge they come across, as well as the cost involved.
Package handling
Traditionally, package handling surcharges only came into effect around peak times, such as the festive season. But many carriers have brought this surcharge into play through the COVID-19 pandemic.
It is possible we will continue seeing these surcharges throughout the year and beyond.
Minimum fees
Carriers generally implement a minimum fee payable by shippers for any package. These minimum fees are subject to regular change and vary significantly from one carrier to the next. It is important to have full visibility into these charges and have the ability to normalise them between carriers. This will empower shippers to forecast costs accurately and highlight opportunities to optimise spending.
Financial reporting
GL coding and cost centre allocation are complex and must be managed by shippers. This can be achieved by categorising costs by things like business units, geography and SKU-level. Shippers need to be able to track unbilled carrier activity and submit details accruals to their finance teams. This enhances visibility into any open liabilities.
Real-time exceptions visibility
This requires the establishment of custom business rules, managed in real-time. Shippers should have the capability to automatically send out relevant reports to the parties that need them. Exceptions should be processed in batches or on a shipment level.
KPIs for spending
Business Intelligence will be fundamental to navigating any changes that come to the new landscape. With powerful tools at their disposal, shippers can keep on top of their KPIs and gain a strong understanding of the limitations of their operations and technology.
The most important KPIs shippers should track include:
- Late percentage
- Cost per shipment
- Average zone
- Cost per lb or kg
- On-time performance
- Freight spend volume
- Carrier compliance
- Service utilisation
- Monthly accruals
- Cost breakout by charge codes
- Hub exceptions
To learn more, or to discover a leading platform for freight management, contact CT Global Freight Audit today.
