Getting competitive prices each time you ship your freight is critical to your bottom line. While traditionally you might be relying on your internal freight rate history to determine the best lanes and rates for your freight shipments, today there’s a better way.
It is here that freight benchmarking or freight rate index tools step in. It’s your one-stop solution to determine the best possible trade lanes for your shipments, negotiate the right rates and ultimately drive savings.
It is one practice that can benefit you immensely irrespective of whether you are a big shipper with thousands of shipments per month or a small shipper.
What does freight benchmarking using a Freight Rate Index mean?
Freight Index or benchmarking tool – refers to systems used by export-import oriented businesses to evaluate and compare the freight rates they are paying for a shipment against the rates for similar shipments in the market.
Benchmarking freight rates enables companies to ensure that they’re paying the right rates for their shipments. Besides, it helps companies understand the movement of the freight market, identify the peaks and troughs and more.
Here are the top 5 reasons why your organisation should use a freight rate index tool:
Your recent freight rate history for a particular lane isn’t enough
The first thing that will probably come to mind when you consider using a freight rate index tool is that you can benchmark rates by merely checking your internal freight rate history for the concerned lane. But that’s just not enough.
Your internal rate or lane history will give you a myopic view of the rate trend. Or in other words, it’s too small of a picture to base your decisions on. It will stop you from getting an idea of what other competitors are paying for their shipment or the larger freight rate trend.
On the other hand, global freight rate index is built to aggregate thousands of rates within no time. Not only do they provide you with a comprehensive picture of the real-time market rates but enable you to see way beyond your pricing history.
Reviewing your freight bills isn’t the right way to benchmark rates either
If you review just your recent freight bills and arrive at a benchmarked rate, then you aren’t exactly getting it right. It’s vital to note that your bills will always be biased to your negotiations.
Reviewing freight bills, be it the ones you have generated for your customers or the ones you receive from your carriers, they will always be influenced by the style and extent of negotiation that happens for a particular deal. It may fail to give you a comprehensive understanding of the actual aggregate market rates.
A quick glimpse of what the rates look like for all major lanes
Freight rate index tools allow you to get a precise picture of the real-time market rates for all significant lanes at any time from anywhere.
Tools like GoComet Freight Index make it possible to access aggregate rates based on thousands of real transactions. This eliminates the need for you to filter through several shipping lines rates on your Transportation Management System or scan through rate history to negotiate well.
You can search for your preferred lane, and the system will instantly display the accurate, live market rate for that lane.
Filtering the right data accurately can be tedious and time-consuming
Scanning through thousands of freight rates for several routes from sources that may or may not be reliable and then crunching those numbers to arrive at a conclusion can be exhausting.
The solution? It’s best to leave it to intelligent solutions such as freight index tools, and they will get the job done quickly and with a great deal of precision.
There are trusted and widely used global freight index tools available for free
That means you can negotiate the best possible rates for each shipment without incurring any additional expenditure. Now add this to the sheer volume of shipments you have, and it is clear how freight rates benchmarking can help you ensure cost-effectiveness. Moreover, increased visibility over market rates would mean better decision-making ability.
Today’s shipping and freight industry is more fast-paced than ever before. Naturally, it has become crucial for supply chain leaders to streamline their procurement processes and procedures to ensure cost-effectiveness, smooth functioning of the network and end-to-end resource optimisation.
Irrespective of whether your company is a small enterprise or a global giant, leveraging an efficient international freight index tool will instantly give you an edge over your competitors. Moreover, it will equip you with invaluable actionable data and business intelligence to make the right decisions.
For more information on how GoComet’s innovative Transportation Management System can help you build a robust, cost-effective and digital supply chain, reach us here.