Rebecca Jung & Joe Wilkinson

Benchmarking Insights for Domestic Parcel Shippers

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Joe Wilkinson is VP of Transportation Consulting at

enVista. He has more than 20 years of experience across all modes of transportation.

Joe works with clients to optimize carrier contracts

and reduce cost.

Rebecca Jung is Senior Director of Transportation at AmerisourceBergen She has

over twenty years in transportation and sourcing

roles and is a wealth of knowledge and insight into carrier management and operational efficiency.

Rebecca Jung & Joe Wilkinson

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What is Benchmarking?

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Why Should You Benchmark?

Even if shippers could compare proposals to one another, and to a baseline agreement (they generally can’t), there is no other way to determine if you’re getting the best value available.

Benchmarking is the only way to determine if you’re getting the best agreement possible.

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Why Should You Benchmark?

FedEx & UPS rating logic are once again diverging.

The days of eyeballing agreements are over.

• List Rates• Surcharges• Fuel• Service Levels

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What can you benchmark?

• Transportation Discounts / Minimums

• Accessorials / Surcharges• DIMs• Caps• T&Cs?

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Model the

Baseline

Select the Peer

Group

Remove Outliers

Model the Peer Group’s

Averages

How to Benchmark

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How to Benchmark• ANNUAL SPEND• SERVICE MIX• RESI / COMM SPLIT

• AVG PKG WEIGHT• AVG PKG DENSITY• SPECIALIZED PRODUCTS

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Segregate by Svc Level

Use effective incentives to account

for discounts / minimums.

DIM divisors and

thresholds are some of the

most important in

today’s environment.

Focus more on totals than

individual cost lines.

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How to Use Benchmarks

Redirecting: Second RoundAnchoring: First Round

We use two paths for large shippers

• Results in more aggressive first round bids• Frames the negotiation from the outset• Reduces time on the backend in asserting

targets

• Reduces disruption on RFP release• Causes less hurdles with NDAs and no-bids• Eliminates the slim possibility of leaving

money on the table• Reduces time on the frontend as RFP can

be issued before benchmarking is complete

The decision is situational and is made based on each shipper’s particular circumstance.

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Interpreting Benchmarks

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How to Communicate Benchmarks

Due to diverging carrier list rates, surcharges, ad rating logic, communication of benchmarks must be systematically genericized.

• Transportation charges Net $ / piece based on shipper-provided distribution• Ground Hwt / Mwt Specific asks (e.g. T5/505, 20 lb. min. avg. pkg. wt.,

140 lb. deficit wt., 180 lb. min. shipment wt.• Surcharges / Accessorials $ / instance (discounted on a % basis)• DIM Specific Divisor, buffer, and / or threshold• T&Cs Specify what will be accepted, and what will not

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Mode-Appropriate Target Setting

DOMESTIC PARCEL: Peer-Based Benchmarking

GLOBAL PARCEL: Lane-Based Benchmarking (with transit constraints)

TRUCKLOAD: Lane-Based Benchmarking with Fuel

AIRFREIGHT: Lane-Based Benchmarking (based on equipment type and transit

requirements)

OCEAN: Lane-Based Benchmarking (with incoterms)

LTL: Carrier-Variable Operating Ratio (VOR) Analysis

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CONVERSATION/ QUESTIONS . . .

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