Why Shipping Performance Evaluation Matters
Shipping isn’t just a backend operation anymore—it’s a key part of customer experience and brand perception. Late or damaged deliveries, high shipping costs, or inconsistent transit times can chip away at your reputation.
Here’s why it’s crucial to evaluate performance regularly:
- Cost control: Inefficient processes silently bleed money.
- Customer satisfaction: On-time, intact deliveries lead to happier customers.
- Operational transparency: You can’t improve what you don’t measure.
According to a 2023 report from McKinsey, businesses that adopt real-time logistics analytics improve delivery reliability by 20–25% (source).
Key Shipping Performance Metrics to Track
When benchmarking shipping performance, focus on metrics that impact both cost and service. Here are some of the most valuable:
1. On-Time Delivery Rate (OTD)
Measures the percentage of shipments delivered by the promised time. High OTD is a clear indicator of reliability.
Formula: (Shipments Delivered On Time / Total Shipments) x 100
2. Average Transit Time
Tracks how long it takes for packages to get from origin to destination. Compare this with industry standards to benchmark performance.
3. Shipping Cost Per Package
This reveals how much you’re spending per shipment, helping to identify overspending or inefficiencies.
4. Damage Rate
Looks at how many packages are reported damaged. A high damage rate may point to packaging or carrier issues.
5. Order Accuracy
Mis-picks or incorrect shipments hurt credibility. Tracking order accuracy helps address fulfillment and training gaps.
How to Benchmark Against Industry Standards
Now that you have the right metrics, how do you know if you’re doing well?
Benchmarking means comparing your KPIs with:
- Historical company data
- Competitor or industry benchmarks
- Third-party logistics providers (3PLs)
Start by researching industry averages. For example:
- Average OTD for U.S. retailers hovers around 92% (Forbes, 2023).
- Damage rate should stay below 1% for most sectors.
Tools like Freightos or ShipMatrix can help with comparative analysis and benchmarking reports.
Tools and Technology to Support Evaluation
Manual spreadsheets? They just don’t cut it anymore. To truly evaluate performance and act on insights, you’ll need tech to automate and analyze data.
Recommended Tools:
- Transportation Management Systems (TMS): Centralizes shipping data, compares rates, and tracks KPIs in real time.
- Logistics Dashboards (e.g., Tableau, Power BI): Visualizes trends and outliers.
- Carrier Scorecards: Helps evaluate performance of each shipping partner.
Implementing these tools allows you to respond faster and optimize smarter.
Strategies to Improve Your Shipping Performance
Once you’ve measured and benchmarked, it’s time to act. Here are a few proven strategies to raise the bar:
- Diversify Carriers: Avoid bottlenecks and leverage regional strengths.
- Negotiate Better Contracts: Use performance data as leverage.
- Audit Invoices: Catch accessorial charges and billing errors.
- Refine Packaging: Reduce DIM weight charges and damage risks.
- Optimize Routes: Use route-planning software for more efficient deliveries.
According to HubSpot, businesses that proactively manage shipping performance reduce customer churn by up to 30%.
When to Review and Re-Evaluate Your Shipping Strategy
Shipping performance evaluation isn’t a once-a-year thing. Regular audits keep your operation sharp and agile.
Review performance:
- Monthly: Basic metrics like cost, delivery time, and damages
- Quarterly: Benchmarking and trend analysis
- Annually: Strategic carrier reviews and contract renegotiations
Staying on top of these check-ins prevents small issues from snowballing.
Conclusion: Turn Metrics Into Momentum
Evaluating and benchmarking your shipping performance isn’t just a logistics chore—it’s your secret weapon for growth, efficiency, and customer loyalty.
Start small, focus on what matters, and build a habit of regular reviews. Over time, the payoff is significant: lower costs, happier customers, and a supply chain that’s built to scale.
Need help analyzing your shipping data or selecting tools that fit your operation? Reach out to our logistics experts—we’re happy to help.
FAQ: Evaluating Shipping Performance
1. How often should I evaluate my shipping performance?
Ideally, review key metrics monthly and conduct deeper performance audits quarterly or annually.
2. What’s a good on-time delivery rate?
Most industries aim for a 90–95% OTD rate. Anything below that could suggest issues with your carriers or processes.
3. How do I reduce my shipping costs?
Analyze cost per package, negotiate with carriers, and optimize packaging. Switching carriers or consolidating shipments can also help.
4. What’s a carrier scorecard?
A carrier scorecard evaluates each shipping partner’s performance based on OTD, damages, cost, and customer feedback.
5. Can I use a TMS even as a small business?
Yes! Many TMS platforms offer scaled solutions for smaller businesses, and they can dramatically improve visibility and decision-making.