If your business relies on shipping products to customers, keeping freight rates competitive is essential. One way of doing this is through freight rate benchmarking. In this article, we’ll define what this practice entails, why it matters, and how to get started.
What is Freight Rate Benchmarking?
Freight rate benchmarking is the practice of comparing your company’s shipping rates with those of competitors or industry standards. This analysis can help determine if you’re overpaying for shipping and identify areas where savings can be made. It involves collecting data on shipping expenses for comparison between similar businesses or industry averages.
Why Is Freight Rate Benchmarking Essential?
Freight rate benchmarking is essential to staying competitive in the shipping industry. Shipping costs can be a substantial expense for companies, so if you’re paying too much for delivery, it could negatively affect your profitability. By benchmarking your rates, you’ll identify areas where money can be saved and better deals with carriers can be negotiated.
Starting With Freight Rate Benchmarking
Are you ready to get started with freight rate benchmarking? Here’s a guide on getting started.
The initial step in freight rate benchmarking is collecting data on your company’s shipping costs. You’ll need to collect details like shipment size and weight, distance traveled, and which carriers you use. Furthermore, research competitors’ shipping rates as well as industry averages.
Once you have this data, you can compare your rates with those of competitors or industry standards. You may discover that certain routes or carrier services are priced too high for what you get; with this knowledge, you can negotiate better rates with carriers or adjust your shipping strategy in order to save money.
Freight rate benchmarking is an essential tool for companies that depend on shipping to get products to customers. By comparing your rates with those of competitors or industry standards, you can identify areas where money can be saved while staying competitive in the shipping industry. With accurate data and analysis, you’ll be able to negotiate better rates with carriers and make informed decisions about your shipping strategy. So if you haven’t already, start benchmarking those freight rates now!
Want help benchmarking your freight rates? Contact us today to speak with a specialist!
Frequently Asked Questions:
Why is freight rate benchmarking essential?
Freight rate benchmarking is essential for companies in the shipping industry, as it helps you remain competitive. Shipping costs are an expensive part of running a business, and if you’re paying too much for delivery, it could have an adverse effect on profitability. By benchmarking your rates, you can identify areas where money can be saved and better deals with carriers can be negotiated.
What data should I collect for benchmarking?
You should collect information on the size and weight of your shipments, their distance traveled, and which carriers you use. Additionally, you can gather details about competitors’ shipping rates as well as industry averages.
How can I compare my rates with those of my competitors?
Once you’ve collected all the necessary data, you can compare your rates to those of competitors or industry standards to see if you’re paying too much for certain routes or carrier services.
What happens if my rates are higher than those of my competitors?
If your rates are higher than those of competitors, you may need to negotiate better prices with carriers or adjust your shipping strategy in order to save money. If you need help negotiating, contact us today.
How frequently should I conduct freight rate benchmarking?
It should be conducted at least once annually, though you may wish to conduct it more frequently if your shipping volume or carrier contracts change.
How can I negotiate better rates with carriers?
To negotiate better rates with carriers, use the data from your freight rate benchmarking to show where your rates are higher than industry standards or competitors’ costs. You could also consider consolidating shipments, using alternative carriers, or altering your shipping strategy in order to save money.
Can I use a third-party company for benchmarking rates?
Yes, there are numerous third-party companies that specialize in freight rate benchmarking. These professionals can assist you in gathering and analyzing data on your shipping costs to compare them with industry norms.
How much can I expect to save through freight rate benchmarking?
The amount you can save depends on your shipping volume, carrier contracts and shipping strategy. On average, companies are able to save 10-20% on shipping costs through benchmarking and negotiation.
Does freight rate benchmarking only benefit large companies?
No, it can be beneficial to companies of all sizes. Even small enterprises can gain insight into where they can cut expenses on shipping costs and negotiate better rates with carriers.