It is said that what gets measured, gets done. And it fits well in the freight transportation segment too. Performance metrics lets you to know your current performance and it also gives directions to devise better processes to become more efficient. This ultimately helps you in charting improvement plans. It can measure your efficiency, level of service and amount of cost incurred.
Freight transportation metrics are vast and extensive, and vary depending upon the mode of freight. It is seen that performance measures can go up to 300 statistical areas. Some metrics are common regardless of mode, while some remain common to carriers within a specific mode, and still there are others that can be customised to the need of specific carriers. It is observed that the major part of performance metrics is related to measuring financial aspects of the business. Other metrics are centered on measuring the length of haul, operating ratio, customer service, empty miles factor, and the like. Given the extensiveness of performance measures, it is critical on the part of the shipper to know, understand, and use the correct transportation metrics to track progress and get an accurate picture of their service and cost. Below is a list of few performance measures for freight transportation:
- Freight cost – Freight cost can be calculated either on the basis of per unit shipped where the unit of measures are standard or it can also be calculated on the basis of mode of transport such as railways, waterways, roadways, airways, intermodal, etc. Freight cost can also be calculated as outbound freight costs as a percentage of net sales and inbound freight costs as a percentage of purchases. These are excellent indicators of financial performance in freight transportation.
- Transit time – It is the measure of time – days or hours – the shipment takes to reach its destination since the time it has left the point of origin. It is often measured against a baseline standard time quoted by the carrier. Transit time varies from mode to mode and carrier systems but it is an important parameter to measure lead time.
- Billing accuracy – It is an important process-related metrics. This is calculated by dividing the number of error-free freight bills by the total number of freight bills in the period. Incorrect pricing, incorrect weights, incomplete information, etc. are considered as errors.
- Fleet utilisation and turnaround time – This measurement area will tell you whether or not you are optimally utilising your fleet – number of full truckloads or half truckload shipments and the average time elapse between a truck’s arrival at your facility and its departure. These will indicate areas of improvement to increase the efficiency of your fleet and also affect freight carrier profit.
- Freight transportation mode – Certain mode of freight transportation are faster than the others, however depending on the customer requirement and freight cost you can intelligently choose a cost-effective mode. Calculation of shipments sent via the optimal mode will give your performance on service as well as cost.
- Timely pick-ups – Timely pick-up by freight carrier indicates carrier performance which in turn has an effect on your shipping operations and customer service. Hence this metric can determine the service aspect of your business.
- Fuel Costs – Rising fuel cost has a direct implication on the overall cost of freight transportation. Hence, this metric will show total fuel cost and also give indicators on how to efficiently look for alterations or introduction of innovative methods to reduce fuel expenses.
- Speed and time of travel – It is a known fact that travelling during peak hours might slow down speed and travel time of freight due to road congestions. Even though actual travel speed also varies depending on terrain, size and load of the truck, driver’s behavior, peak period congestion can be avoided by scheduling freight transport during non-peak periods.
The above-mentioned measures are broad parameters to measure performance of freight transportation in the areas of cost and service. Devising standard measurement parameters according to your business need can have a 360° benefit for your business.