When shippers and freight forwarders need to assess the ocean carriers’ performance, they use KPIs backed by analytics. Without analytics, it wouldn’t be possible to see which carriers are performing well or bring to the carriers’ attention which areas need improvement. It gives shippers and freight forwarders insight to reduce costs, improve competitiveness, manage risk, optimize, and more, and KPIs serve as a critical reflection of how carriers are supporting shippers in their business goals. Monitoring ocean freight carrier KPIs is necessary, as is keeping KPIs informed through data analytics.
What is a Carrier Scorecard?
Every shipper wants to work with carriers that perform well and deliver on their promises. Carriers shouldn’t get in the way of the shipper providing a reliable service for their customers and should support the shipper through the quality service they provide. Shippers keep track of this with a scorecard for each carrier.
A carrier scorecard (also called a logistics metrics scorecard) is how shippers and freight forwarders assess their transportation providers and their performance. They record key metrics for various carriers to determine the most favorable carriers to work with, given the shipper’s top priorities.
A scorecard effectively provides a snapshot of the carrier and summarizes what the shipper can expect when working with them again. At the same time, it serves as proof for the carrier if any areas demand improvements or if the shipper would like to negotiate a new contract based on the carrier’s past performance. Analytics show trends and patterns, valuable insight for the shipper and carrier in choosing a course of action.
Analytics that Inform Carrier Scorecards
The goal is to proactively monitor a wide range of scorecard metrics so that it is available when the data is needed. There are metrics that a company will consider high priority when choosing carriers to work with that will influence their carrier selections and other metrics focus on improvements while working with that carrier.
In general, shippers and freight forwarders will want to monitor data for KPIs related to timeliness, accuracy, quality service, avoiding issues, and charges and invoicing. Under each category can be long lists of specific measurements and KPIs that require data collection, calculation, and analysis. Many of these KPIs require data on where the cargo is and when it will arrive.
Why is Monitoring Ocean Freight Carrier Performance Important?
Shippers need insight from data analytics to make more informed decisions. The service levels they receive affect the service they can pass down to their customers. If there are significant delays compared to the estimated arrival date or if there are frequently unexpected changes in the capacity available, shippers can’t be expected to meet their original date estimations. At the very least, they need to account for delays in their own schedule.
If they are transporting goods with high risk to the rest of the supply chain should something go wrong, shippers need to know the carrier values quality service and has the metrics to prove it. If there are often damages, the shipper will know to work with a different carrier, reducing its risk.
In the case of charges such as demurrage or billing issues, data analysis can help save on costs with the appropriate action taken. It can help alert carriers to trends that need improvement, for example, if there are consistent problems with the bills the carrier sends. From shipment delays to billing, each scenario offers an opportunity for the shipper to work within a space of better predictability and to increase efficiency.
Technology’s Role in Gathering Data for Analytics
Some KPI data is gathered for events that occur after shipment delivery is completed—such as those related to invoicing or issues like damages. These make for straightforward data collection. Trade data is another source of valuable insight that helps importers and exporters make decisions. This data allows shippers to identify risk, give accurate estimations on time and cost, and find opportunities to optimize, so their goods arrive according to expectations.
As previously mentioned, many KPI data points depend on the positioning and timing of the goods during the shipment, which serves the shipper best only when it is collected in real-time. This makes it possible to track changes in real-time, respond to any emerging issues, and supply KPIs with the most up-to-date data at all times. This type of real-time container tracking is not as common in the ocean freight industry as it should be, considering the benefits. Container tracking is, however, expanding as ocean freight data capabilities continue to advance and companies see the inefficiencies of attempting to gather their data manually.
Leveraging Analytics for Better Performance
Analytics make a powerful tool in shippers’ and freight forwarders’ goal of more informed operations and better carrier performance. VIZION provides the advanced level of container tracking data that informs the process of identifying improvement opportunities. Book a demo with VIZION today to see how you can leverage real-time container tracking for your ocean freight.