Getting competitive costs every time is essential to your bottom line whether you ship items by air or sea. While the existing negotiating system has long prevented shippers from engaging in productive negotiations, there are now more effective ways to do so that will increase profitability.
Freight rate negotiations are now easier and more effective than ever thanks to the development of digital automation technology in the supply chain industry. It has eliminated the need for you to call your vendors repeatedly, send them a lot of emails, and follow up with them in person. You may develop and share inquiries digitally with all of your vendors in a matter of minutes thanks to modern Logistics Resource Management technologies.
The system will then begin automatically negotiating with ALL of your vendors so that you get the greatest deal for your cargo without having to put in any extra time or effort. From that point on, all you have to do is sit back and relax.
Regardless of whether you are a little shipper or a large shipper who sends out thousands of shipments each month, this practice can be very helpful to you. Along with helping you cut costs, it can also give you useful business insights, which can improve your performance.
What is freight benchmarking?
Freight benchmarking, to put it simply, is the process of comparing the freight charges you pay to the market rates being paid in real-time for identical shipments. This implies that you are always aware of the prices other market participants are paying for the identical deal when you negotiate rates.
The tool you use to benchmark rates will take into account your inquiry in light of your history with freight rates, the carriers you have previously used, and will compare them to the going rate for the relevant trade lanes and ports. You can then assess your position and determine the optimal prices, trade routes, etc. based on the results.
Freight benchmarking would automatically imply that there is no question regarding the competitiveness of the rates you pay in comparison to those of your peers. Employing a reliable system is crucial. To help you make the best choices, it should give you access to accurate, current market prices that you can trust.
What specific benefits does freight benchmarking offer shippers?
Always try to get the greatest freight rates.
By benchmarking rates, you may be able to get a thorough understanding of the live-market rates for the given trade lane. As a result, you may set a goal rate for your vendors to meet based on the benchmark price as you negotiate prices, whether you do it traditionally or with the aid of a Logistics Resource Management platform. The vendor whose rate is closest to the goal rate can subsequently receive your business. This will guarantee that you get the finest bargain and, more significantly, prevent you from shelling out more money than is absolutely necessary.
Additionally, freight prices along the same shipping path can occasionally differ significantly. In this situation, freight benchmarking will also assist you in making better selections by clearing up these discrepancies.
Manage unanticipated circumstances in a better way
You will be better able to estimate future patterns in rates as a result of being aware of the current market rates. You will eventually have a sense of the general direction of rate movement. It will let you respond proactively to any crisis or unplanned catastrophe and lessen the harm it might do to your business operations
Incredibly useful present-day business insights
With limitless access to data on market pricing and your shipping history, you can gain important business insights. It can also make it easier to decide which rates—spot or contract—are better for you, which carrier and lane are best for you, and more.
Thus, you may proactively select suppliers, carriers, and shipping routes that increase efficiency and cut expenses.
Control your freight expenses proactively.
By comparing prices, you may successfully manage your freight expenses. You are certain that there is no chance that you will pay more than your peers. Target rates are an option, and there is a big difference between rates that are appropriate and those that are not. Additionally, these advantages gradually trickle down to your clients, promoting better business.
What else?
Benchmarking can be useful as well.
Analyze various geographic regions to find new business opportunities.
A better comprehension of market dynamics
Learn more about the performance and customer service of the carriers you use, and gain perspective on the near- and long-term outlook for spot rates.
Freight rate benchmarking will undoubtedly play a significant role in procurement plans in the years to come if the development of the supply chain industry is anything to go by.
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