Key Performance Indicators (KPIs) for transportation

Key Performance Indicators (KPIs) for transportation

In this post we will see some examples of key performance indicators (KPIs) for the transportation sector, one of the most important for logistics and for the supply chains in general, since its cost has a direct impact on the bottom lines of companies and in the cost of products paid by the final consumer.

Now let’s see some of these indicators, what they mean and how they should be calculated:

Freight cost per unit: this indicator is calculated by dividing the total freight cost by the number of units shipped in each period (month, week, months). It is used when the shipped units are standard (kg, liters, tons) or the products are always identical. It can be detailed also calculating it by modal of transport (trucks, trains, boats, airplanes, or even more detailed: full truckload, LTL, intermodal, etc.).

Percentage of truck capacity used: generally used for large loads, it is calculated by dividing the transported weight by the maximum one allowed (for truck, boat, etc.). If the average usage is 80%, this means that there is an idle capacity of 20%, which could be converted into more profit and greater efficiency.

Outbound transportation cost as a percentage of sales: the (delivery) freight costs are divided by the revenues of sales for a given period. Obviously the percentage varies greatly depending on the products sold, but they are a great indicator to check the financial performance of the transportation area.

Inbound freight cost as a percentage of purchases: freight costs are divided by the cost of goods purchased in a given period. You should not compare this indicator to products that are purchased with different freight types: those whose freight is known but paid by the supplier and those paid by the company itself.

Time in transit: it is measured as the number of days (or hours) from the time the lot leaves the plant/company until the moment it is delivered to the customer. It is usually compared to the time in transit offered by a quote from a transportation company for the same product, mode of transport and the same destination. The time in transit can vary greatly due to the chosen modal.

On-time pickups: it is calculated by dividing the number of pickups made by the total number of loads sent in a period. With this you can evaluate the performance of the carrier, since it affects the performance of your company and the satisfaction of your customer.

Claims as a percentage of transportation costs: it is calculated by dividing the costs of loss and damage claims by the total transportation costs. It is measured for each supplier and for the company. High numbers can show problems in packaging, storage or with the carrier.

Truck turnaround rate: this indicator is calculated by measuring the average time it takes between the arrival of the truck and its exit. The smaller, the longer the truck is in the road, delivering the products. If this time is high, it means that the process of handling the lots and of those handling the loading and unloading needs to be improved.

Percentage of traceable loads: this indicator is calculated by dividing the number of loads transported with tracking by the total number of loads sent over a period. This indicator measures the relative degree of carrier sophistication.

With these indicators in hand, choose the most important ones for your case, adjust them if necessary and monitor your transportation-related processes.

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