Analyzing your worst performing lanes is a common best practice among logistics professionals. By identifying areas of improvement, you can make impactful changes to reduce costs and improve service.

Setting Up Filters for Analysis

  1. Timeframe: Start by focusing on recent activity to impact current operations. Filter your data for the last four weeks to identify recent trends and areas for immediate improvement.

  2. Benchmark Rate: Set your benchmark rate to contract rates. This is particularly useful in normal to tight markets, where contract rates are typically lower than spot rates. This filter will help prioritize lanes running heavily on spot rates, pushing them up in your analysis for closer examination.

  3. Lane Consistency: Focus on lanes with frequent activity. These are the lanes where you can make a significant impact. Apply a filter for lane consistency to frequent, allowing you to concentrate on those lanes that are most likely to benefit from renegotiation or operational changes.

Analyzing Lanes

  1. Delta Cost Analysis: Identify lanes with a high delta cost, which is the cost over your benchmark rate. For example, a lane from Kansas City to Houston costing $2,200 against a benchmark of $1,800 shows a 20% increase over the benchmark. This lane, with significant volume, would rank higher in your analysis for potential savings.

  2. Spot Load Analysis: Determine the percentage of spot loads in each lane. A higher percentage indicates a reliance on spot markets, which may contribute to higher costs.

  3. Carrier Performance: Evaluate carriers by sorting them from worst to best based on their performance on each lane. Identifying underperforming carriers allows you to negotiate better rates or shift volumes to more efficient providers.

Expanding Your Analysis

  1. Time Frame Expansion: Consider expanding your analysis from 4 weeks to 12 months. This broader perspective can reveal trends, such as an increase in the use of spot rates or fluctuations in load volume, indicating high volatility.

  2. Volume Volatility: Analyze weekly volumes to understand capacity challenges. Lanes with significant week-to-week volume changes are more difficult to secure at consistent rates, contributing to higher costs.

Making Internal Changes

  1. Collaboration: Share your findings with internal teams, such as the commercial or inventory planning teams, to identify and implement changes that can lead to cost savings. Adjusting internal processes can be as effective as changing carriers.

  2. Export for Further Analysis: Export your data to Excel for deeper analysis, allowing for collaborative review and action planning.

Continuous Improvement

  • Regularly work through your top worst-performing lanes, ideally on a monthly basis. This ensures a continuous improvement process, helping you stay ahead of inefficiencies.