Why should shippers benchmark freight rates?
Driving cost savings in today’s fast-moving supply chain industry has become quite a challenge in light of unforeseen events, fluctuating rates and ever-changing supply-demand dynamics. For you to better manage costs, determine the best possible trade lanes for each shipment and drive savings, freight rate benchmarking has become a necessity.
Irrespective of whether you are a big or a small shipper, benchmarking rates is one practice that can not only save you money but can also help you gain valuable insights, understand competitive threats and identify new business opportunities.
What is freight rate benchmarking? How does it work?
In simple terms, freight rate/cost benchmarking is comparing the price you are paying for your shipment with what your competitors are paying for a similar shipment. The key is to have access to precise and reliable market rates which can then help you identify the best opportunities and aid your decision making.
The process reviews your freight rate history along with the carriers used, with the present-day market rates for the concerned trade lanes, helping you understand the direction in which the freight market is moving, foresee the peaks and troughs and evaluate your position.
Benefits of freight rate benchmarking:
Better negotiate freight rates
The freight market is highly volatile. Rates tend to vary to a great extent even within the same shipping lane and lack of transparency often invites hidden, unnecessary charges which silently bite into your profit. However, when you have access to benchmarked rates, you are in a better position to negotiate or fix a target rate for your freight forwarder or carrier. This helps you make sure that you aren’t being fooled into overpaying for your shipment.
Thorough analysis and valuable insights
Once you start benchmarking your freight rates with the help of a system, over time it offers you a thorough analysis of both, spot rates as well as long-term contracts. A comprehensive view of all the average rates, then allows you to gain a deeper understanding of how competitive the rates offered by your carrier are, as against the actual freight rates.
Increased control over costs
The more you understand the pattern in which your costs are incurred, the better you can control them. By understanding average rates for each lane and being constantly aware of prevailing rates, you can take steps to not only stabilise but also reduce surcharges. Needless to say, the benefit of getting competitive rates further gets extended to your customer as well.
What’s more? You can apply such benchmarking across your freight business units and in return, you can better evaluate your contracts, carrier performance and drive substantial savings. There are indeed some Freight Indexes that help you benchmark freight rates for major ports across the world like World Container Index, , and other . Keeping an eye on them during your process can help you save a lot.
DHL Claim Multi-Sector Collaboration Key to Fighting COVID
Since January, global logistics leader DHL has distributed more than 200 million doses of the COVID vaccine to 120+ countries around the globe. While the US and UK recently rolled out immunisation plans to most citizens, countries with less developed infrastructure still desperately need more doses. In the United Arab Emirates (UAE), which currently has one of the highest per-capita immunisation rates, the government set up storage facilities to cover domestic and international demand. But storage, as we’ve learned, is little help if you can’t transport the goods.
This is where logistics leaders such as DHL make their impact. The company built over 50 new partnerships, bilateral and multilateral, to collaborate with pharmaceutical and private sector firms. With more than 350 DHL centres pressed into service, the group operated 9,000+ flights to ship the vaccine where it needed to go.
With new pandemic knowledge, DHL just released its “Revisiting Pandemic Resilience” white paper, which examined the role of logistics and supply chain companies in handling COVID-19. As Thomas Ellman, Head of Clinical Trials Logistics at DHL, said: “The past one year has highlighted the importance of logistics and supply chain management to manage the pandemic, ensure business continuity and protect public health. It has also shown us that together we are stronger”.
Multisector partnerships, DHL said, enabled rapid, effective vaccine distribution. While international scientists developed a vaccine in record time—five times faster than any other vaccine in history—manufacturers ramped up production and logistics teams rolled out distribution three times faster than expected. When commercial routes faced backups, logistics operators worked with military officers to transport vaccines via helicopters and boats.
In the UAE, the public-private HOPE Consortium distributed billions of COVID-19 doses to its civilians as well as other countries in need by partnering with commercial organisations such as DHL. For the first time, apropo for an unprecedented pandemic, logistics companies made strong connections with public health and government.
“While the race against the virus continues, leveraging the power of such collaborations and data analytics will be key”, said Katja Busch, Chief Commercial Officer DHL and Head of DHL Customer Solutions & Innovation. “We need to remain prepared for high patient and vaccine volumes, maintain logistics infrastructure and capacity, while planning for seasonal fluctuations by providing a stable and well-equipped platform for the years to come”.
How Do We Sustain Immunisation?
By the end of 2021, experts estimate that we need approximately 10 billion doses of vaccines—many of which will be shipped to areas of the world, such as India, South Africa, and Brazil, that lack significant infrastructure. This is perhaps the greatest divide between countries that have rolled out successful immunisation programmes and those that have not. As Busch noted, “the UAE’s significant investments in creating robust air, sea, and land infrastructure facilitated logistics and vaccine distribution, helping us keep supply chains resilient”.
Neither is the novel coronavirus a one-time affair. If predictions hold, COVID will be similar to seasonal colds or the flu: here to stay. When fall comes around each year, governments will need to vaccinate the world as quickly as possible to ensure long-term immunisation against the virus. This time, logistics companies must be better prepared.
Yet global immunisation, year after year, is no small order. To keep reinfection rates low and slow the spread of COVID, governments will likely need 7-9 billion annual doses of the vaccine to meet that mark. And if DHL’s white paper is any judge of success, multi-sector supply chain partnerships will set the gold standard.