In the wake of the COVID-19 pandemic, the pricing landscape of shipping is likely to shift. Given the complications of apples-to-apples price comparisons between carriers that already existed, the post-COVID world will see this issue compound further.
That’s why, now more than ever, shippers will need to have greater visibility into their shipping spend.
Shippers will need the ability to cut through the murkiness in understanding the capabilities of the carrier across the board. More importantly, they’ll need to rationalize carrier offers, contracts, and proposals and make actual comparisons between them in terms of service and cost.
Important Areas of Spend Visibility
In order to adapt to changing times, shippers need to not only have shipping spend visibility but know what they should be looking at.
Here are some of the most important aspects of spend that shippers should be looking at:
Types of Surcharges
Carriers have numerous types of surcharges. What complicates the matter further is that, often, those surcharges are not uniform between carriers. From a comparison perspective, this makes it extremely difficult to compare prices between carriers.
In order to have full visibility, shippers need to understand the meaning of each and every surcharge they encounter, as well as their cost.
Package Handling Surcharges
Traditionally, these surcharges were only applied during peak times of the year, such as around Christmas. However, carriers have implemented this surcharge during the COVID-19 pandemic.
Indeed, it’s possible these surcharges might continue all the way through the holiday season – and possibly beyond.
Carriers set a minimum fee that all shippers must pay for any package. As with other charges, these minimum fees not only change regularly but vary by carrier. Having full visibility into not only the charges but being able to normalize them between carriers will enable shippers to get a full picture of their costs and identify ways to optimize their spend.
Shippers must effectively manage complex GL coding and cost center allocation. This can be done by categorizing costs by geography, business unit – as well as SKU-level. Shippers must have the ability to track unbilled carrier activity and provide detailed accruals to the finance team, giving greater visibility into open liabilities.
Real-Time Exceptions Visibility and Management
Doing this requires setting custom business rules or managed in real-time. Shippers should be able to push out reports automatically to relevant parties. Exceptions should be dealt with on a shipment-level or in batches.
Business Intelligence will be the key to navigating the new landscape, whatever the changes may be. With powerful BI tools, shippers can get an immediate handle on their KPIs and a better understanding of their operational and technical limitations.
Some of the most important KPIs for shippers to follow include:
- Cost Per Shipment
- Late Percentage
- Cost Per Pound/Kilo
- Average Zone
- Freight Spend Volume/Mode
- On-time Performance
- Service Utilization
- Carrier Compliance
- Cost Breakout By Charge Codes
- Monthly Accruals (Open Liabilities)
- Hub Exceptions