Evaluating the performance of the carriers that you partner with is a big part of creating an optimized supply chain. However, assessing carrier performance also requires you to analyze a broad range of KPIs - based on container shipping data that is often hard to come by.
This article will help you get started building a more transparent supply chain that allows you to easily evaluate your carrier partners' performance. We also explain why ocean freight KPIs are important, the challenges of getting good shipping data analytics to inform KPIs, and the top KPIs to consider as you go about evaluating carrier performance.
Why Are KPIs Important?
Creating an optimized supply chain first requires identifying weaknesses in your current supply chain. If you aren't sure how the carriers you partner with are performing across a variety of criteria, identifying areas of your supply chain where there is room for improvement will be a challenge. Leveraging container shipping data and other big data analytics in the shipping industry is a great starting point to meet.
A carrier scorecard built using KPIs based on container shipping data can also serve as a valuable tool for helping you better manage your carrier relationships. For instance, when you notice an issue with a certain aspect of a carrier's performance - and you have the data and shipping analytics to prove it - it becomes much easier to hold your carrier partners accountable. By the same token, knowing a carrier's performance can likewise serve as valuable leverage when it comes time to negotiate a new contract. For instance, if you know that a carrier had a high rate of damaged shipments during your prior agreement with them, you may be able to use this big data shipping information to negotiate a lower rate for your next contract.
In addition to helping you evaluate the performance of your ocean carrier partners, KPIs are also great for assessing the performance of ports, ground freight carriers, and air freight carriers. At the very least, tracking KPIs will ensure that you are aware of any issues or inefficiencies that might be holding back your supply chain. There is no shortage of ways for supply chain managers to leverage this information for positive results.
The Current Challenges of Getting Good Container Shipping Data to Inform KPIs
A KPI is only as good as the quality of its underlying data. However, collecting and organizing the type of container shipping data needed to inform KPIs is a struggle that shippers and freight forwarders continue to face.
Container tracking data, for example, is one form of data that plays a crucial role in creating a number of carrier performance KPIs. However, tracking the real-time location and status of ocean freight is a capability many organizations still do not possess.
This is just one instance of the challenges of gathering data to inform KPIs. Without the right technology, collecting carrier performance data and turning it into KPIs is an inefficient and error-prone process - if it is even possible for your organization in the first place.
However, the good news is that utilizing the right technological solutions can make collecting and analyzing data to inform carrier performance KPIs much less of an expense and hassle. With VIZION API, for example, shippers and freight forwarders can automatically track the location and status of all their ocean freight and use this shipping analytics data to inform critical KPIs such as schedule reliability, on-time shipment of cargo, port dwell times, and many more.
The KPIs to Build Using Shipping Data Analytics
We've covered the challenges of collecting container shipping data for KPIs and that using the right technology can go a long way toward mitigating these challenges. Now let's take a look at some of the impactful KPIs to track if you would like to better understand the performance of your carrier partners and supply chain as a whole.
By gathering the big data analytics in the shipping industry needed for the KPIs listed below, you can create a comprehensive carrier scorecard that will help:
- Guide contract negotiations with carriers.
- Hold carriers accountable.
- Analyze the overall health of your supply chain.
With that said, here is the top carrier performance KPIs to build using maritime data analytics.
Vessel Schedule Reliability
Vessel schedule reliability is a KPI based on container shipping data that measures the difference between the date a carrier advertises that a vessel will arrive at a specific port and the date that it actually arrives, with an on-time delivery counting as a delivery that arrives either the scheduled day of delivery or the day before. Vessel schedule reliability can then be expressed as either a percentage showing a carrier's rate of on-time arrivals or a figure showing the average deviation between advertised arrival data and the actual arrival date for a specific carrier.
The Elapsed Time Between Shipping Instruction and Bill of Landing Issue
This container shipping data-based KPI measures the difference between the date when Shipping Instructions (SI) are issued and when a confirmed Bill of Lading (B/L) is received. Any difference between these two dates of less than three days is seen as a success case, while any difference of more than three days counts as a negative mark against a carrier.
On-Time Shipment of Cargo
On-time shipment of cargo is a shipping analytics KPI that measures the difference between the Estimated Departure Date (EDT) provided in the cargo's original booking confirmation and the Actual Departure Date (ATD). If the difference between these two dates is less than a day, it is considered a success case.
Port-to-Port Time Against Schedule
Port-to-port time against schedule is another piece of big data in shipping that measures the difference between the Estimated Transit Time (ETT) listed in the shipment's booking confirmation and the Actual Transit Time (ATT) that it takes for cargo to travel from its port of origin to its destination port. A difference between these two dates of less than one day is considered a success case.
Cargo Availability at the Destination Port
Cargo availability at the destination port is a piece of container shipping data that measures the difference between the estimated date that a shipment will be available for pickup - designated as Estimated Arrival Date (ETA) of Last Port of Discharge in the shipment's original booking confirmation - and the Actual Arrival Date (ATA). A difference between these two dates of less than a day counts as a success case.
Average US Inland Transit Times
More a measure of the ground freight carriers that you might partner with rather than ocean freight carriers, the average U.S. inland transit time is a nugget of container shipping data that measures how long it takes, on average, to transport cargo from its port of discharge to its destination or last intermodal hub.
Port Dwell Times
Port dwell time is a KPI analytic in the shipping industry that measures the average duration between when cargo arrives at its port of discharge and when it departs.
Port Calls and Turnaround Times
Port calls and turnaround times measure a port's efficiency by comparing the number of calls that a port receives to the average turnaround time of a vessel in that port - defined as how long a vessel remains at the port during a given call.
Liner Shipping Connectivity
Liner shipping connectivity is an overall measure of a country's capability to support the import and export of ocean freight. This crucial bit of container shipping data includes considerations such as the number of shipping lines servicing that country, the total capacity of the vessels in those shipping lines, and the total number of vessels deployed in the country.
Port Cargo Handling Performance
When evaluating a port's overall performance, this KPI combines maritime data analytics such as the number of calls a port receives, the port's average vessel turnaround time, the quality of the port's cargo handling or its rate of damages, and a variety of other salient data points. This container shipping data is then used to compile Container Port Performance Index (CPPI), which highlights the top-performing ports across the world each year.
Experience the Power of Data-Driven KPIs
Tracking the KPIs outlined in this article will ensure that reliable insights drive the decisions you make regarding your organization's supply chain. However, as we've already discussed, gathering the data for these KPIs is often no easy feat.
Thankfully, VIZION API makes collecting one of the most vital types of container shipping data needed to inform these KPIs easier than ever before. With VIZION API, you can receive real-time container tracking information via API pushed to any software system or spreadsheet, empowering you to build KPIs based on accurate, reliable data analytics in the shipping industry. To see for yourself how VIZION API can provide your organization with the data it needs to optimize its supply chain, be sure to sign up for a VIZION API demo today!