Shipping is one of the key factors that today’s global market needs. Every business and end consumer requires fast shipping and expedited shipping process. Also, because there is so much of a boom in the ecommerce sector today, that with the global consumer access makes shipping very important in any business. However, the business needs to send the goods through different modes, which could be airways, waterways, or roadways. Still, the important factor that must be considered is to get the shipment delivered at the most competitive price. There are many conditions while transporting goods from one place to the other, the critical one being all the rules to be followed at a reasonable price. The profitability in completing the shipping has changed over the years as the negotiation system has adopted unconventional methods like Freight Benchmarking, which is more effective.
The change came from the technological transformation in the world with digital adoption. Digitization is the main factor that has automated the negotiation system in the supply chain industry. This particular transformation has evolved the freight rate negotiation, and it has simplified the entire process of pricing and promoted efficiency in the industry. In the traditional system, the shipping process involves many challenges and tasks while accomplishing the shipment. The tasks like numerous calls, emails, and appointing a person as an in-charge to complete the follow-ups and handle vendors were hectic, time-consuming, and posed many loopholes.
Today as the digital platforms are available, vendor management logistics management is done with a click of a button. The inquiries, verification, and communication are easily made online in minutes. The system is so efficient after the negotiation process is digitized, the vendors get the best negotiation price, and you can sit and keep a tab on the best quotation just from the seat. The automation eliminates the challenges of the traditional freight negotiation, and there is a lot of time and effort which can be utilized to improve other processes.
What is Freight benchmarking?
Being aware of the market rate is the key to success in every business. Freight benchmarking is the process that helps shipping companies to get the real-time market freight cost. By knowing the actual freight cost, the shipping companies get the knowledge of the rates that other shipping companies in the industry are paying for the same consignment.
To find the accurate benchmark of the shipping cost, automated tools give the best price after checking the freight cost records, the carriers used, and running a comparison check to determine the market rates related to the shipping ports and trade lanes. The companies can evaluate the pricing after finding out the comparison report and decide on a reasonable deal.
To put it in simple words, Freight benchmarking offers competitive rates, which eliminates challenges in pricing and thereby makes profitability higher for businesses.
How does Freight benchmarking work?
The data as per the contract rates of freight cost is found on the platforms and indices related to Freight benchmarking. Most of the global trading industry businesses offer freight data to such platforms or indices that help the shipping companies get trending rates in all the shipping routes. Since digitization has increased abundantly, these benchmarking tools and platforms give shipping companies accurate information. The only aspect of importance is the verification of the genuineness of the tools used. If the benchmarking tool is genuine and has accurate information, the shippers reap profits.
Therefore the tool must have immense credibility that gives the user the highest reliable, real-time insights, and shows accurate market rates, which ensures the company makes decision-making based on facts.
The usefulness of Freight benchmarking to the sipping companies
- Competitive pricing
Market awareness and knowledge are crucial in every sector, and the supply chain is an enormous industry. It is quite possible to get into losses if the shipping companies don’t have enough knowledge of the rates. The freight benchmark lets the shippers know the real-time rates for the concerned trading routes. The companies’ tools for freight benchmarking give the shipper information on the vendor’s target rates. It saves time and money and helps the shipper get the right deal with market price without getting into losses. Benchmarking also clarifies the shipper when the freight rates vary in the same routes, making them make informed decisions.
- Managing Uncertainties
Because the supply chain is a huge industry and shipping is critical, being aware of the situations and predicting the uncertainties is one of the biggest uses of Freight benchmarking. Let’s say the shipping for cars is regular from route A. The shipper can mitigate the losses that could arise in a crisis by drawing regular insights and evaluating trends in that route. This kind of crisis management will help in reducing the losses in operations and also helps the shipper to be proactive and utilize time.
- Real-time data analysis
Real-time data is like a gold mine. It helps the businesses to chalk out plans to study the market rates and the freight rate record of the business. With such important data in hand the companies can easily draw inferences and plan accordingly. It helps the shipper to compare the types of rates, timing, carriers opted in the past, and the trade lanes. With this information, the shipping company can choose the best freight rates that benefit the company. Additionally, the shipper can pick the favorable vendors, routes, and carriers to be more efficient and gain profit with the information.
- Take charge of expenditure
Benchmarking is a solution to freight expenditure; a shipping company can make the right decisions that help them to manage the costs. It gives confidence to the company that they are making an informed and wise decision, which positively affects the business. Proper management of freight costs helps the end consumer also with benefits and improves the business.
The shipping sector is highly competitive and dynamic, which allows the shipping companies and freight forwarders to have a proper process for procurement and delivery. With this streamlined pace, the companies can manage costs and offer a competitive market rate in the industry. The Freight benchmarking tools increase the productivity of the companies, whether big or small. With the real-time data, the companies can optimize the performance and seamlessly continue the supply chain business.