11 KPIs to Measure Your Carrier Performance

by Nadia Brosious

On-Time Payment

Cash flow is a good indicator of business health and profitability. Cash flow is measured by dividing the number of on-time payments by the total payments. Anything below 90 percent is not acceptable.

Number of EDI or API Invoices

Moving from paper-based invoices to EDI or API can bring several advantages to your business, such as increased savings, accuracy, and efficiency. EDI and API invoices are about 35 percent less expensive to process and reduce the time spent and inaccuracies when manually processing invoices.

Capacity Issues

If a carrier cannot handle your shipments, several problems can occur, such as late pickups, late deliveries, and unattended customer needs. To measure performance in this area, use specific KPIs such as cost per item, cost per order, percentage of perfect shipments, dock utilization, and the time from pickup to departure.

Routing Guide Compliance

Routing guide compliance increases productivity by eliminating time-consuming or financially costly mistakes in the supply chain. Ensure your vendors can easily access clear and concise routing instructions to reduce service delays and unnecessary expenses. Measure your expected savings up against the actual savings to gauge the effectiveness of your routing guide.

Monitor Tenders Accepted Versus Tenders Declined

Monitoring Tenders accepted versus declined tenders can tell you if your carriers meet their contractual obligations. When a first-choice carrier refuses a substantial number of tenders, the cost for the shipper may increase to the point where it might exceed the budget. Carriers will reject tenders for different reasons, so it is vital to understand why and look for ways to improve this measurement.

Monitor Driver Performance

Knowing which carriers have the highest-performing drivers comes in handy when evaluating them. Are drivers being tested according to the drug and alcohol clearinghouse? Do they handle your freight correctly and with the right equipment? Are they on time, or do they miss pickups? Not only are the above potential safety issues, but they are factors that need to be carefully considered. Selecting a suitable carrier with the best driver performance can help ensure your freight gets where it needs to be on time with a lower risk of damage.

Transportation Utilization

Remember that space is valuable. You can increase the value of your transportation spending by switching from less-than-truckload (LTL) to full-truckload (FTL), raising the minimum quantity for orders, or combining multiple shipments into one.

Efficient transportation utilization is also more eco-friendly because it lowers emissions and reduces fuel consumption. Optimizing transportation minimizes a company’s carbon footprint. Pay attention to this metric for greener business operations. 

Accessorials as a Percent of Freight

Divide any accessorial charges, including fuel, permits, or fees, by the total freight expenditures for a period. If you notice an increase in these costs, consider re-evaluating your processes to eliminate inefficiencies. A high percentage indicates inefficiencies or transportation issues. It is essential to control and optimize accessorials and avoid excess accessorials, which can erode profits. High accessorial percentages can mean operational inefficiencies.

 Some examples include long loading and unloading times, inefficient route planning, or communication breakdowns. Identifying the inefficiency can lead to improvements in operational efficiency. Another critical reason to avoid excess accessorials is to maintain customer satisfaction through transparent, accurate pricing and reliable services. Tracking accessorial usage makes it possible to track trends and patterns. If the number of accessorials rises, it might be a signal to improve processes and or renegotiate contracts. Resources can be better allocated to address underlying issues that lead to the charges. Minimizing charges is attractive to customers seeking cost-effective solutions. Monitoring this KPI as a percentage of freight helps ensure compliance with various regulations and standards. 

Invoice Accuracy

 Invoice accuracy is crucial in maintaining financial integrity and customer satisfaction. Accurate invoices ensure the amounts billed and received match the goods and services provided to avoid discrepancies or errors. Another financial benefit to invoice accuracy is that it helps create better cash flow management. Businesses can predict and plan for revenue numbers more effectively and plan better financing and decision-making. It is essential to measure the number of accurate invoices and categorize the inaccurate invoices by carrier and reason. Continual issues with incorrect invoices can indicate performance, and you can limit or avoid using this carrier.

This will also reduce the need for additional administrative work to fix errors, like reissuing paperwork and handling customer disputes, which frees up time to dedicate to other business activities. Maintaining invoice accuracy also prevents legal troubles because many industries have regulations regarding billing and invoicing.

Invoice accuracy is critical. Inaccurate invoicing compromises data integrity and can lead to finance mismanagement. Over or undercharging clients because of billing errors can reduce profits. Lastly, accurate invoices are essential to financial reporting. Stakeholders, investors, lenders, and regulatory authorities need precise information to assess the quality of your business correctly. 

Number of Damage Claims

This KPI measures the frequency or count of damage claims filed against a freight company. It monitors and assesses the performance of a freight business regarding the damages incurred to the goods transported. There is always a risk of damaged freight during shipping; however, the number of freight claims is essential as it can significantly impact the bottom line. You can calculate the effect by dividing the total cost of loss and damage claims by the total freight costs. The higher the number, the higher the likelihood that packaging or processing problems will occur on the carrier’s end.

The resulting numbers provide insights into how often customers receive damaged shipments. Monitoring these numbers periodically (monthly, quarterly, and annually) can reveal trends, with increasing numbers indicating a worsening issue and decreasing numbers indicating improvements in operations. A high number of damaged shipments likely indicates customer dissatisfaction and a potential loss of business, while a low number indicates higher customer satisfaction.

The number of damage claims is an important KPI to monitor because it indicates potential financial risks. Every damage claim has a cost associated with the investigation, processing, and customer compensation, and the more claims, the more fees your business faces and an increase in operational expenses. Frequent claims can even be a sign of potential legal risks if the claims are filed due to negligence or non-compliance with standards and regulations. Determining the numbers can significantly improve your quality control by identifying areas where improvements are needed, like packaging, handling, and transportation. 

On-Time Performance

A carrier’s ability to meet On-Time Pickup, On-Time Departure, and On-Time Delivery will directly affect your shipment and customer success. Measure the percentage of shipments picked up, departed, and delivered on time. A rate of 90% or higher is generally considered acceptable. It is vital to always strive for on-time performance to maintain a good reputation and fulfill contract obligations and regulatory compliance. 

Paying attention to your company’s on-time performance, KPI will positively impact your business. This KPI can make or break your brand image, reputation, and financial standing, so set procedures to ensure successful pickups and deliveries. Meeting delivery deadlines results in satisfied customers, which builds trust and loyalty when your brand establishes itself as a reputable and reliable carrier. This leads to word-of-mouth referrals, repeat business and potential business partnerships. 

Managing time wisely will make you a more efficient carrier and save your company costs in the long run. Analyzing late deliveries can help improve processes, routes, and resource allocation. Customers prioritize the reliable carrier over the untrustworthy one, and a high on-time performance rate can boost your company’s competitive advantage.

 Analyzing your supply chain processes can increase cost efficiency. Late deliveries can incur fees and additional costs for the company and freight customers. Maintaining on-time performance can reduce these extra costs. At FreightCenter, we continuously evaluate our carriers and most recently awarded our Carrier of the Year Award based on these criteria and the dedication and commitment to customer service standards.

Did you enjoy the 11 KPIs to Measure Your Carrier Performance, and are you ready to ship? Compare carriers and rates today. Our shipping agents are always available to assist; call us at 800.716.7608 to speak with an expert.

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Q: What is a KPI?

A: KPIs is an acronym for key performance indicators, which are metrics used to measure and evaluate the performance of aspects of freight shipping. These metrics allow you insights into efficiency, effectiveness, and shipping quality processes. 


Q:  Why are KPIs important to freight shipping?

A: KPIs are an excellent way for businesses to measure their performance effectively and improve their operation procedures. These indicators provide data-driven insights to identify optimization areas. This makes it possible to enhance decision-making to enhance customer satisfaction and reduce costs associated. 


Q: How can I ensure the accuracy of KPIs on invoices?

A:  To maintain the accuracy of the KPIs, keep accurate records of shipping costs to compare with carrier invoices. Make sure that any discrepancies are addressed with carriers to avoid billing errors. 


Q: How can I improve on-time performance?

A: Work with your 3PL to determine optimized routes, effective scheduling, carrier selection, and communication with carriers and customers. Acknowledging possible disruptions with factors like weather and traffic is also essential.


Q: What is freight cost per unit, and why does it matter?

A:  This calculates the average cost to ship a single unit of your product. This helps shipping efficiency and cost control. This helps increase shipping efficiency and cost control, which helps with pricing and budget decisions. 

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