Business intelligence has evolved into a digital tool that can bring a new level of transparency and visibility to the logistics industry, says Josh Dunham, co-founder and chief executive officer of Reveel.
A study of Reveel’s customers shows that businesses have been having “a really difficult time with decision-making support” when it comes to planning the logistics function, Dunham says. Especially challenging is the analysis of shipping costs at the product level. The tendency has been to evenly allocate such costs across all lines of business, but companies find themselves getting hit with heavy surcharges for products that exceed volume or dimensional limits. Only by identifying those particular charges can companies see which products aren’t profitable to ship. Up to this point, Dunham says, “they had no idea. Every time they were shipping, they were losing money.”
Forecasting and budgeting is difficult to carry out without accurate numbers. Close analysis reveals that rate increases by FedEx and UPS were in reality higher than announced. A 5.9% rate hike turned out to be 12.86% for FedEx and 10.25% for UPS, Dunham says.
Business intelligence is vital to determine actual shipping costs. Now, says Dunham, companies have access to large datasets and algorithms that produce accurate insights. That’s one way that shippers can offset the dominance of the two major parcel carriers, which together command around 94% of the market. With that kind of power, Dunham says, “they don’t need to be transparent.”
Another surprise is the definition of peak season, which FedEx this year deemed to begin on September 5, so that it could impose an applicable surcharge. But a market analysis shows that, for Reveels’s customers, September’s shipping volumes are actually 1% below the mean average for the year.
Taking into account this year’s rate increase and peak-season surcharge, shippers will be spending 14% more on parcel services, Dunham says.
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