Benchmarking is the process of comparing the cost, cycle time, productivity, or quality of a specific process or method to another that is widely considered to be a market level, an industry standard, or best practice. In the logistics world, benchmarks may be published for transportation rates in sea-freight, air-freight, trucking, rail, as well as for warehousing leases, logistics processes, and supply chain in whole or in part.
Due to the deregulation of most of the transportation industry, few benchmarks exist. Specializing in the bulk shipping, the dry Baltic index is an actually effective benchmark recurrently published by an exchange. It specializes in bulk dry ships and tanker fixtures as well as the sale and purchase of merchant vessels. Most of the other indexes published in the transportation sector have not yet acquired standardization status, are just not effective or not a reflect of the market reality, and henceforth are not reliable nor representative of the market. This is currently the case for the six or so containerization index fighting with one another. This was the case with the shipping lines conference system. This has been the case with the successive rates filing systems of the US Federal Maritime Commission (FMC), as well as the air cargo tariff and rules (TACT) published by the IATA.
SCMO offers customized benchmarking services and interpretive statistical analysis in the fields of logistics and transportation. This helps you to know whether your strategy should include re-negotiations in order to get better conditions for both domestic and international rates. It also offers valuable insights into how well your company is doing when it comes to negotiating these costs. We offer benchmarking services on spot basis, and also deploy recurrent benchmarking services published online (publicly or privately) at a frequency chosen by our customer. Typically, a benchmarking project includes deliverables that help you:
- Compare rates by trade
- Quantify unique requirements
- Provide recommendation to close gap to market
- Provide insight to competition sourcing approach
Warehousing & distribution
The following case study demonstrates how SCMO approach has been successfully applied to client issues.
Our client was a EUR 500 million trading company in the electronics field, representing a sea freight volume of 5,000 TEUs and an air freight volume of 1,000 Tons. Our advisors worked with them to identify the shipment types, traffic lanes, rates and volumes involved, using this information as the baseline for comparison purposes. We then conducted both a freight rate data query from our constantly updated active freight database, and a comparison with the current market. We helped our client identify and achieve substantial revenue enhancements, leading to more than US$ 3 million in additional profits for the company.