5 Essential KPIs to Reduce Shipping Expenses and Increase Profit Margins

Use the right data and metrics to improve your logistics experience

Benchmarking and measuring performance are essential in today's data-driven supply chain for determining what works and what does not. KPIs offer a road map for enhancing shipping experiences and supply chain networks. They aid in addressing issues with solutions supported by evidence, thereby preventing confusion and conflict. The following five KPIs can indicate the overall performance of carriers and shippers.

On-Time, In-Full (OTIF)

OTIF measures the on-time pickup/delivery rate and the "in-full" rate, indicating the frequency with which a carrier picks up and delivers the correct amount of freight within the specified time window.

Claims Rate

The freight claim rate is determined by dividing the value of damage claims by total freight costs. This key performance indicator measures the amount of money lost by shippers due to lost or damaged freight.

Accessorial Spend

By dividing accessorial costs by total freight costs, this key performance indicator illustrates the impact of accessorial spending on overall costs, thereby facilitating the identification of excessive fees.

Tender Acceptance and Rejection

The load acceptance and rejection rates indicate the frequency with which carriers accept or reject available freight. This KPI enables shippers to evaluate the frequency with which their carrier partners provide requested services.

Average Dwell Time

The average dwell time is the amount of time a carrier remains stationary at a scheduled stop. This metric assists shippers in evaluating their own performance, as excessive dwell time can lead to decreased carrier profit and dissatisfied drivers.

Understanding KPIs: Choosing Better Partners and Being Better Partners

Knowing these KPIs benefits shippers in two ways: by helping them select superior carrier partners and by enhancing their own performance as partners.

Choosing Better Partners

The majority of KPIs assist shippers in evaluating the degree to which their carrier partners meet service and performance expectations. Identifying low-performing carriers enables shippers to take corrective action or transfer their freight to stronger partners, resulting in cost savings and improved operational efficiencies.

Being Better Partners

Some KPIs, such as dwell time, assist shippers in assessing their own performance as business partners. By analyzing their performance and implementing the necessary adjustments, shippers can strive to become "shippers of choice," thereby attracting better carrier partners and ensuring access to capacity at competitive rates.

KPIs are indispensable for understanding and enhancing supply chain performance. By focusing on these five key indicators, shippers can optimize their operations and establish solid relationships with carriers.

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