Data makes the world go round. And for companies that are shipping goods and components around the world, data can provide the visibility needed to optimize their processes and find opportunities to save. But without robust freight analytics to turn it into strategic insights, data is just numbers.
“Freight analytics provides you several pieces of information,” says one shipping expert from a global manufacturing firm that leverages CTSI-Global’s Business Intelligence (BI) solutions to make the most of its data. “Freight analytics are key to driving smart logistics decisions.”
For companies that are not currently taking advantage of freight analytics, there’s no time like the present to start. Here are three areas where companies can benefit from these insights the most.
Freight analytics enable companies to quickly identify the best shipping mode
Sometimes, sending shipments overnight by air is necessary. But in many instances, shippers choose this option when ground transportation would have sufficed—and would have shaved a substantial amount off the cost.
The expert says that in his experience, Small Parcel Domestic Air typically costs 10 times as much as ground. The exact amount that companies can save varies depending on the contracts they have with their carriers. But the potential for savings is significant—if companies have visibility into which facilities are overspending on air transportation.
“We can quickly identify if shipments are going air versus ground,” the expert says of his company’s own shipping data. “We have the ability to understand our air shipment activity and to go back and take action with our vendors or factories to remove as much air activity as possible. Because those analytics are there, we can recognize our spend. The analytics drive decisions.”
Data increases visibility into shipping activity outside of a companies’ contracted carriers
Another area where individual facilities may be unnecessarily increasing spend is at the carrier contract level. Without complete visibility across their various locations, it’s difficult for companies to recognize when a location is failing to utilize contracted rates and becoming over-reliant on spot quotes from carriers.
Freight analytics provide that visibility and enables companies to step in and stamp down on unauthorized spot quotes.
“If I don’t have a contract with one less-than-truckload carrier and I start seeing freight activity going to that carrier, obviously we aren’t getting optimal rates from them,” the expert points out. He says his company has seen, on average, a 35-45% increase in cost when shipments go out with a non-contracted carrier, so curbing errant activity like this is good for the bottom line.
“Our freight payment systems allow us to identify carrier compliance or non-compliance and go after the vendor or the factory to drive the use of a carrier which we have a contract with,” he says. “Freight analytics makes that possible, because the activity is visible.”
Lane activity data empowers companies to negotiate more competitive carrier rates
More visibility can also give companies the information they need to leverage better rates with their carriers. The expert advises companies to come to the negotiating table with their lane activity in hand. If the majority of their shipments are moving between California and New York, for example, they can use that information to push for a lower price along that route.
“From the data, we can see our activity—where are we shipping the most to, where are we getting the most products from?” he says. “From a domestic point of view, we look at state-to-state pairs, we see where our activity is the most common, and we go back to the carriers and try to negotiate more competitive rates between those states.”
Optimizing their most active lanes can be hugely beneficial for companies. The expert says that lane activity data can also help companies strategically shift which carriers they’re using.
“We actually have the opportunity to look at that lane activity and go back to all of our carriers and see if any of them are going to fight and become more aggressive,” he says. “So we might shift.”
More data, better insights, smarter decisions
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