In the fast-moving supply chain industry, it is crucial that you use the right tools to gather market intelligence and build an agile supply chain. Whether you are a big shipper with thousands of shipments each month or a small shipper just starting off your business, an integral part of building a cost-effective, resilient and flexible supply chain is freight benchmarking.
Freight rate benchmarking or benchmarking freight rates not only helps you negotiate better rates but also assists you in determining the best possible trade lanes for your shipments, gain valuable business insights, recognise possible threats and identify new avenues to drive savings.
What is freight benchmarking?
Simply put, freight benchmarking or freight rate benchmarking implies comparing the freight rates you pay with real-time market rates for similar shipments. The idea is that before you finalise your freight rates, you must gain a thorough understanding of the rates prevalent in the market and negotiate deals accordingly.
Typically, benchmarking tools consider your freight rate history as well as that of other shippers for similar lanes along with the present-day market rates for the concerned route. Based on the benchmarked rates, you can then negotiate or renegotiate your deal and get the best possible prices.
The process ensures that you don’t pay more than what is required. The benchmarking system offers you enough information to finalise deals at rates that are consistent with the real-time market rates for the chosen lane.
Why should freight benchmarking be an integral part of your supply chain planning?
- Thorough analysis
With freight benchmarking it becomes easy to analyse whether it is spot or contract rates that serve you better, which lane you should choose and more. A comprehensive understanding of the rates offered by various forwarders/carriers over time can even help you determine who provides you with the best deals.
- Proactive response to change
By constantly being aware of the trends in market rates, you will be in a better position to respond to any unforeseen change or event. You’ll be able to proactively address fluctuations in the rates without compromising your company’s overall operations.
- Better negotiate rates
Benchmarked rates can better equip you to negotiate rates for all your shipments. In this case, you can even give your forwarders a target rate based on the benchmarked rates. At times, the rates tend to vary even within the same shipping lane and clarity over these differences will help you make better decisions and hence, save costs and reduce transit time.
- Increased control over your freight spend
When you take charge of the prices you pay for your freight, you potentially have full control over your freight spends. You can easily save your company from the hassle of overpayment by being informed about average rates for each lane and the prevailing rates. Above all, the benefits of leveraging competitive rates eventually trickles down to your customers as well.
Given the direction in which the supply chain industry is moving, in the years ahead the extent to which procurement strategies will revolve around benchmarked data is only set to increase.
GoComet Freight Index (GFI)
With GoComet Freight Index (GFI) you can benchmark rates for all your international shipments in a matter of a few seconds and that too for free. The system considers the top-rated and lowest quoting vendors on each route from over 25,000 quotes submitted by more than 4,000 vendors from across the world on the GoComet platform every month. It then runs its proprietary machine learning algorithms that are similar to those used by the World Container Freight Index and Shanghai Freight Index to benchmark your freight rates.