Complete Guide on Freight Benchmarking

Freight benchmarking is a game-changer for shippers looking to secure the best rates, whether shipping by air or sea. Traditional negotiation methods, with their endless calls and emails, make it hard to consistently get competitive prices. But with digital automation, the process has evolved.

Modern Logistics Resource Management platforms allow you to share inquiries with all your vendors in minutes, and automated systems handle the negotiations to get the best rates for you. However, combining this automation with freight benchmarking is what truly sets your strategy apart.

Freight benchmarking helps you compare rates across trade lanes, identify cost-saving opportunities, and gain valuable insights to make smarter shipping decisions. Whether you’re managing thousands of shipments or just a few, it ensures you consistently get the most competitive rates while boosting overall performance.

What is Freight Benchmarking?

Simply put, freight benchmarking involves comparing the freight costs you pay to the real-time market rates for similar shipments. This means that whenever you negotiate rates, you’re aware of what other companies are paying for the same services.

To benchmark rates, the tool you use will assess your inquiry based on your freight rate history, past carriers, and current market rates for the relevant trade lanes and ports. This comparison helps you identify the best possible rates, trade lanes, and understand your negotiating position.

Freight benchmarking ensures you’re paying competitive rates compared to your peers. The key is to use a reliable system that provides accurate, up-to-date market data, enabling you to make informed decisions.

How exactly does freight benchmarking help shippers?

Negotiate the Best Freight Rates

Freight benchmarking gives you a clear view of current market rates for specific trade lanes. When negotiating rates—whether traditionally or using a Logistics Resource Management platform—you can set a target rate based on this benchmark. You can then choose the vendor offering a rate closest to your target, ensuring you get the best deal and avoid overpaying. It also helps clarify any significant rate variations within the same shipping lane, allowing for more informed decisions.

Better Manage Unforeseen Events

Knowing real-time market rates helps you anticipate future trends. Over time, you’ll understand how rates fluctuate, enabling you to respond proactively to crises or unexpected events, minimizing disruptions to your operations.

Gain Valuable Real-Time Business Insights

With access to extensive data on market rates and your freight history, you can extract insights to improve your strategy. For instance, you can easily decide whether spot rates or contract rates work better, and identify which carriers and lanes are most cost-effective. This allows you to select options that maximize efficiency and reduce costs.

Take Control of Freight Spending

Benchmarking empowers you to manage freight costs confidently, ensuring you don’t pay more than your competitors. You can set target rates and distinguish between fair and inflated rates. These savings can also benefit your customers over time, boosting your business.

Additional Benefits:

• Analyze different regions to find new business opportunities.
• Understand market dynamics better.
• Gain insights into the service quality and performance of your carriers.
• Predict short- and long-term spot rate trends.

As the supply chain industry evolves, freight benchmarking is set to become a vital part of procurement strategies in the coming years. 

GoComet Freight Index  

GoComet Freight Index allows you to benchmark freight rates for all your shipments on a single dashboard for free in a matter of few seconds. 

The system uses spot as well as contract rates to calculate the GFI and the data is obtained in real-time from freight forwarders and carriers with whom a shipper has partnered with for a shipment.

How does GoComet Freight Index benchmark rates?

The GoComet Freight Index system considers the top-rated and lowest quoting vendors on each route from over 25,000 quotes that are submitted by more than 4,000 vendors from all across the globe on the GoComet RFQ management module.

On entering the name of the origin port, destination port and the container type, the system runs its proprietary machine learning algorithms and instantly displays the benchmarked rates. These algorithms are similar to those used by the World Container Freight Index and Shanghai Freight Index.

Access GoComet Freight Index (GFI) for free!

For more information on how GoComet can help you build a cost-effective and resilient supply chain with its innovative digital automation technology, reach us here.