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7 Transport Management KPIs to Keep Track Of

by Jill Quijano,
Feb 19, 2024
Transport Management KPIs to track
Transport Management KPIs to track

Table of Contents

We know that transporting goods is more than moving things from Point A to B. A key factor in any successful transport management operation is monitoring your KPIs.

Transport KPIs, or key performance indicators, help you track various angles of your operations. You then use these results to refine your existing processes.

Now, deciding which KPIs to start tracking can be difficult. But we are here to help you narrow your choices. Read along to learn all about the key transport management KPIs your team could be monitoring today.

The Importance of KPI Monitoring in Transport Management

In transport operations, KPIs are commonly used to track progress by quantifying efficiency and performance.

They’re also a great strategy for identifying where the problem lies and what other departments are impacted by it.

For example, if you’re seeing a high number of failed deliveries over a period, businesses need to get to the root cause before it impacts other functions such as finance or customer service.

Tracking KPIs with a Transport Management System

Monitoring transport KPIs manually can be time-consuming and prone to errors. You’re collating data from multiple sources, leading to discrepancies. Not to mention, manual tracking lacks real-time insights, making it a challenge to identify trends or anomalies.

To effectively track KPIs for transport management, it’s important to:

  1. align them to your business goals and customer needs;
  2. review and update them regularly;
  3. automate your tracking with a Transport Management System (TMS).

A TMS simplifies KPI monitoring by consolidating data from various sources and consolidating them in one place. Moreover, you get real-time visibility of shipments, deliveries, delays, and incidents in easy-to-read formats and reports.

A TMS also allows you to compare KPIs across different areas in the business and alerts you to any issues.

7 Key Transport Management KPIs To Start Tracking Today

1. Must-Arrive-By-Date or On-Time Deliveries

Did you know that 80% of customers prefer to shop with retailers that show exact delivery dates? It goes to show that more people demand transparency, and they’re expecting companies to adhere to those schedules.

On-time deliveries or must-arrive-by-dates is a metric that assesses if your business is meeting its promised delivery times.

Now, it’s critical to keep track of delivery times as one late delivery triggers a domino effect. Additional orders scheduled for that day may be delayed, leading to refunds and unhappy customers, quickly burdening your customer service teams. 

Worse, custom dissatisfaction can trigger churn, resulting in bigger revenue loss.  

To track on-time delivery, you simply need to divide the number of deliveries for a period vs. the number of late deliveries.  

If you want a more detailed look at why deliveries are late, break down the KPI into different metrics such as:  

  • Time in fulfilment: This covers the entire order fulfilment process; from the moment an order is placed to shipping.
  • Delivery time variance: The difference between the actual delivery time and the scheduled delivery time of each shipment.
  • Truck turning rate: The time spent on-site for each delivery.
  • Route efficiency: This measures the effectiveness of transport routes in terms of minimizing distance, time, and costs.

Diving into these numbers helps you reduce lead times and meet promised shipping dates to boost customer satisfaction and loyalty.

Industry Benchmarks: On-Time Delivery

Companies in highly competitive industries should strive for a 99% to 100% on-time delivery rate. But in general, a rate of 95% and above indicates that a business delivers its goods within an acceptable time frame.

At the end of the day, set a benchmark that matches your operational capabilities, industry standards, and customer expectations.

2. Delivery In Full, On Time (DIFOT)

As the name suggests, DIFOT measures how many orders were delivered on time, in totality, and with exactly what was ordered.

For example, out of 100 orders, 95% were delivered on time, accurately, and in the correct quantity. This gives us a DIFOT of 95% for that period.

It’s a KPI commonly used for measuring delivery efficiency. However, it’s common for teams to apply it throughout the supply chain too.

Consider a manufacturing company that relies on multiple suppliers for raw materials. Monitoring DIFOT helps this business assess each supplier’s performance in meeting order accuracy and delivery timelines.

A low DIFOT score could be due to various factors such as stockouts, production delays, or transport inefficacies.

Industry Benchmarks: DIFOT

DIFOT scores vary per sector or industry. However, your business would want to strive for 95% and higher.

3. On-Time Pickup

On-time pickup is a transport metric that covers the portion of pickups completed within a set time window. It displays freight carrier efficiency and how it impacts operations and customer service.

Measuring on-time pickup is straightforward. If you have your pickup window and pickup times (which you can get from a TMS!), you can divide the total number of shipments over a specific period by the number of pickups completed on time.

Industry Benchmarks: On-Time Pickup

According to the Supply Chain Consortium, the average on-time pickup is 96% across several sectors, a feasible industry standard.

4. Transportation Costs

Now, you didn’t think transportation metrics are all about pickup and delivery, did you?

Like any business, your goal is to remain efficient while keeping costs down.

That said, it’s essential you determine the total costs borne from transporting goods. These costs, which include operating costs, maintenance charges, and fixed costs, should be measured alongside your monthly gross income.

Not only does it help with calculating your profit margins, it’s also helpful when sending quotations to customers or partners.

So, what should you take into account when calculating transportation costs? Here are a few ideas:

  • Operating costs: Fuel cost per kilometre, fuel surcharge
  • Fixed costs: insurance, driver wages, depreciation, insurance
  • Maintenance costs: As the name implies, these are expenses for maintaining your fleet (tires, repairs, painting, etc.)

Your overall goal is to decrease transportation costs while maintaining delivery quality.

Industry Benchmarks: Transportation Costs

For obvious reasons, there’s no industry benchmark for transportation costs. Factors such as intermodal transportation, distance travelled, fuel prices, and market conditions influence your costs over time.

However, you can compare your monthly costs against competitors to identify opportunities to optimise spend.

5. Truckload Capacity

Simply put, this metric tracks the percentage of space utilised on your truck.

It’s a well-known fact that every centimetre of truckload capacity is a revenue opportunity. Unused space means a loss on fuel costs, extra wear and tear for your fleet, you name it.

You need to ensure you’re maximising the potential of your trucks over a given period. Determine this metric by dividing the shipment weight by the available shipping capacity. This helps efficiently load cargo for each delivery run.

Industry Benchmarks: Truckload Capacity

Of course, the greater the overall weight, the greater the savings are for businesses and customers alike. The goal is to then add as much weight as possible but be mindful to stay within the legal and safety shipment standards.

6. Billing Accuracy

Avoid incurring unnecessary costs by tracking billing accuracy. As with any business operations, you need to keep a sharp lookout for incorrect pricing, invoices, and inaccurate weightage.

Calculate billing accuracy by dividing the number of error-free freight bills by the overall freight bills during a given period. You can do this for each carrier or in total.

Tracking this metric gives you insights into charges that might have gone unnoticed, thereby reducing transportation costs and increasing your net profit.

Industry Benchmarks: Billing Accuracy

At least 95% to 98% or a hundred!

Invoices should accurately reflect the services provided, rates, and surcharges. You don’t want to end up overcharging (or undercharging) your customers or partners.

To meet or exceed these standards, make sure you train staff involved and invest in technology solutions such as transport management systems or billing automation software – or a platform that provides the best of both.

7. First Attempt Delivery Rates (FADR)

In transport, the first delivery attempt matters more than you think.

But they are not exactly an anomaly. Failure to obtain a signature, incorrect addresses, or a simple case of miscommunication are some of the common reasons behind failed delivery attempts.

Regardless of the reason, failed attempts go through a process that depends on the delivery company. For example, the Australia Post has its policy, while private logistics companies have their own policies in place.

Failing a delivery attempt (especially your first one) significantly impacts your logistics costs and reputation. Every kilometre you take puts an extra dent in your monthly budget.

Moreover, you’re likely not charging customers extra for a redelivery attempt. So, every additional delivery is a loss for your company.

Calculate first delivery attempts by dividing the number by the total number of deliveries (and multiplying it by 100 to obtain a percentage).

Industry Benchmarks: FADR

Companies look to maintain an FADR of 90% to 95%. Anything from 95% and above is considered excellent.

Track Impactful Transport KPIs with TransVirtual

Now, we’ve only just scratched the surface. There are hundreds of transport KPIs that you can measure and analyse, from safety measures and driver turnover rates to order cycle time.

Before deciding on the metrics you want to start tracking, decide on the data that would be most relevant to your business. The last thing you need is to be distracted by numbers irrelevant to your operations or long-term goals.

Don’t hesitate to work with a TMS partner as well. At TransVirtual, we offer more than just a TMS. We also offer our expertise and guidance gleaned from our experience working with trucking companies.

By continuously analysing and refining key metrics, you get to make data-driven decisions to enhance your operations and stay competitive.