Visibility Has Become A Top Three Criteria for Shippers in Carrier Selection

Shippers have always placed an emphasis on cost and past delivery performance in choosing a carrier as their logistics partner, but providing real-time visibility of shipments in transit has now joined the list as one of the top three criteria for carrier selection.

That’s one of the key findings in a major shipper survey conducted by the United Kingdom research firm Transport Intelligence (Ti) LTD in partnership with project44. Transport Intelligence specializes in global logistics research. The firm surveyed 234 shippers between October and November 2021 to identify selection criteria that shippers use when choosing their transportation providers. Ninety percent of the shippers canvassed for the study have annual revenues in excess of $500 million.

Carrier Visibility Essential to Shipper Business

The survey found real-time visibility was the third most important criteria for carrier selection. More than half of the all shippers surveyed — 57.4 percent — said that real-time visibility is now a pre-requisite for carrier selection. When the mode of transportation involves air freight, that percentage climbs to 68.4 percent among shippers as a prerequisite for doing business. By way of comparison, the study found that 62 percent of ocean shippers said real-time visibility was a business pre-requisite while 57.1 percent of shippers said real-time visibility was a requirement for trucking freight.

The study’s findings suggest that carriers who are unable to provide shippers with real-time visibility place themselves at a competitive disadvantage in the marketplace. That should become especially true as more companies make shipment transparency a base requirement for tendering freight. By having real-time visibility of shipments, supply chain executives can identify potential delivery exceptions and take corrective action to mitigate the impact of service disruptions on distribution, production, or sales.

More Visibility Needed in Supply Chains

The study underscored the fact that most supply chains still lack the visibility to be proactive in dealing with delivery issues. Only 20.2 percent of survey respondents said their carriers provide “real-time visibility into their partner operations” across all modes and regions of their supply chain. That said, 33.2 percent of respondents said they did have some real-time visibility with some of their transportation modes in some regions.

Other Key Findings

In addition to surveying shippers on their carrier selection criteria, the study also delved into other relevant aspects of supply chain operations. Other key findings were:

  • 60.4 percent of respondents said the pandemic-related closures and congestions were a significant factor causing disruption to their supply chain in the past six months.
  • The driver shortage was ranked the number one issue facing transportations followed by rising freight rates
  • 38.7 percent of survey takers book their shipments directly with the carrier under contract while 24.3 percent use 3Pls or forwarders, 21.7 percent use the spot market, and 15.3 percent a digital platform.
  • Average on-time delivery (OTD) performance of primary carriers was only 82.9 percent, the survey reported. By the way, OTD performance was slightly better for retailers with 84.4 percent for retailers while less for manufacturers with 81.6 percent