American Shipper’s August issue article “Setting the benchmark” (pages 6-10) provided useful information on the changes now happening in transportation benchmarking and the increased focus on data.
In our experience of providing ocean transportation benchmarking services to shippers, we do agree that benchmarking costs alone, without taking into account differences in carrier service or transit times, is meaningless. We would even say that it could lead to dangerous conclusions and measures. In fact, ensuring that you compare apples to apples is absolutely essential in ocean transportation benchmarking. For some shippers, getting faster transit times or more generous detention and demurrage clauses can fully justify a higher ocean freight rate than the “average.”
At Drewry, we also provide separate cost benchmarks for small, medium and large BCOs, as our benchmarking members range from companies moving less than 10,000 TEUs a year to plus-300,000-TEU shippers.
The article mentioned different ways of defining transportation benchmarking. We do not define “benchmarking” as being just a cost numbers comparison exercise. Within a shipper community like a benchmarking club, companies cannot only benchmark their costs against their peers and identify cost reduction opportunities, but they can also discuss their ocean freight procurement and e-sourcing practices with the benefit of confidentiality within a closed group.
For example, Drewry’s benchmarking members can participate in closed surveys on “best practices” and the subsequent on-line discussions about the findings. Another key requirement when benchmarking which was not mentioned in the article: make sure that nothing is discussed that is likely to contravene antitrust rules!
Philip Damas, Director,
and
Cath Earl, Senior consultant for benchmarking,
Drewry Supply Chain Advisors, London
This commentary was published in the September 2015 issue of American Shipper.