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Mitigating Rising Transportation Costs and Freight & Parcel Rates with Benchmarking: What Shippers Should Know

Freight & Parcel Rates

As global shipping costs and freight and parcel rates rise, driving up inflation with no end in sight, brands and shippers are taking a hard look at the effect of these increases on their businesses – including the impact of the costs being passed on to their customers.

Factors Contributing to Increasing Transportation Costs

Many factors contribute to carriers raising prices for individual shippers and issuing their general rate increases (GRIs). The past year had a confluence of factors that all put a strain on the global supply chain, including capacity constraints, labor shortages, government regulations, COVID-19 disruptions, driver shortages and inflation.

Predictably, UPS announced its 2022 GRIs and other contract changes at the end of October 2021. They increased (and continue to increase) fuel surcharges, Delivery Area surcharges, Residential fees for Ground and Air Residential surcharges. One major change for 2022 is the Remote Area surcharges for the lower 48 states. Previously, Remote Area surcharges applied only to some ZIP codes in Alaska and Hawaii. In 2022, nearly 2,700 ZIP codes in the Continental U.S. are now incurring a $12 Remote Area surcharge.

Benefits of Benchmarking for Brands and Shippers

The effectiveness of benchmarking is based on the characteristics of the mode being analyzed and the source of data being used. Certain modes, from a market structure and characteristics perspective, are more effectively analyzed with benchmarking – while others are more appropriately addressed via other methodologies.

For shippers, the questions of what, when and why to benchmark will ensure that the output of the exercise achieves maximum impact. Answering the question, “How am I performing compared to my peers?” only tells one part of the story and does not prescribe how to proceed.

Accelerating the Market for Benchmarking Services

In October 2021, Gartner released the Gartner® Market Guide for Benchmarking Services for Transportation Rates and Logistics Performance Metrics, where enVista was recognized as a Representative Vendor.

We believe these accelerated inquiries from shippers for benchmarking services and insights into understanding competitive market performance and rate comparisons.

enVista’s CEO, Jim Barnes, said, “We consider it our distinct honor to be recognized in the 2021 Gartner Market Guide for our benchmarking solutions. In our opinion, maintaining a competitive advantage requires shippers to keep a pulse on the market and how their transportation operations and rates compare with competitors. enVista’s team of experienced transportation consultants and data analysts takes that burden off the shipper by continuously monitoring client rates and metrics against their competitors to ensure maximum efficiency, value and success.”

Getting Started

Once an organization has prioritized its business goals and objectives, it will be able to easily identify which benchmarking tool(s) will drive the greatest value according to these use cases. Transportation networks of all sizes and maturity levels can benefit from the use of benchmarking tools to evaluate and execute against transportation savings opportunities. Through the definition of a future strategy, execution of lane-level changes, network modeling or freight term optimization, a company can reduce transportation cost, increase service levels and accelerate return on investment.

When shippers want to understand where their freight and parcel costs stand in comparison to the market, it’s vital to work with the right partner. When conducted improperly, benchmarking can be detrimental to transportation operations and spend, making it important to leverage experts with exceptional experience within the transportation and supply chain markets.

enVista provides comprehensive solutions to overcome global transportation challenges and costs, including transportation consulting, strategic sourcing, business intelligence and global freight audit and payment. Our transportation management services maintain a competitive advantage for the world’s leading brands, including GNC, Orvis, Urban Outfitters and Williams Sonoma. Learn more about reducing your transportation costs and how we can accelerate results for you and your organization. Schedule a free consultation today.

*Gartner, “Market Guide for Benchmarking Services for Transportation Rates and Logistics Performance Metrics”, Brian Whitlock, October 13, 2021.Disclaimer- GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

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