Q4 Update - Key Findings from the ISO Service Index Benchmarks for H1 2024

Welcome to Performance Matters, our LinkedIn Newsletter covering data, analysis, and trends from the fast-growing ISO Service Index, our consortium of shippers, brokers, and carriers. Each month, we'll post key findings, benchmarks, and ISO Scores across the industry. Subscribe to follow and get insights from the Logistics Performance Measurement pros!

WHY SHOULD YOU CARE?

There are many sources of industry data and tons of pricing indexes to pull from. But none that index service performance today. ISO is committed to bringing the industry a "FICO" score for freight; a simple score to help you understand the service you can expect from your supply chain partners. As we onboard new customers, our consortium of service data grows. And there are a couple of things that make our data different:

1. Data Accuracy: Our customers use ISO to collaborate with carriers on their shipment data through an Exception Management workflow, establishing a 38% more accurate dataset shared between parties in the form of scorecards and analytics,
2. Data Quality: Good in = good out. We score data quality to help drive continuous improvement in the quality of the data we collect from the TMS, ERP and other systems of record.

We want to hear from you. Please let us know what data you'd like to see in future reports. The full benchmark report is available on our website. Read here

Introducing the ISO Service Index Benchmark Report

During the pandemic, the freight market experienced significant demand and enjoyed high rates. However, the market began to shift after the pandemic eased as consumer spending patterns shifted, inventory levels increased, and economic uncertainties grew. By late 2022 and into 2023, many carriers and brokers reported declining freight volumes and lower rates, which ushered in the freight recession. This shift was further exacerbated by factors such as inflation, rising interest rates, and broader economic slowdowns, which collectively contributed to the challenging conditions in the freight market.

The freight recession is now in its second year. While the market continues to face lower demand and rates than during the pandemic, some green shoots are appearing. However, logistics service providers should not focus just on rates but instead on optimizing service performance to differentiate themselves and grow in an increasingly challenging market.

Shippers and logistics service providers can utilize Isometric Technologies’ (ISO) service index to compare transportation performance to industry benchmarks. The index offers dozens of standardized performance KPI benchmarks and the “ISO Score,” a weighted composite of on-time delivery, on-time pickup, and tender acceptance/bounce rates. An ISO score is intended to be a "FICO" score for freight and is a composite measure of service, 0-100, factoring in weighted On-Time Pickup, On-Time Delivery, and either Tender Acceptance (Shipper Service Index) or Bounce Rate (Broker Service Index).

For our first-ever look inside the ISO Service Index, we break out data from the first half of 2024, focusing on service levels and performance metrics for both our Shipper and Broker networks. The report highlights how service quality is critical for brokers and carriers to maintain strong relationships with enterprise shippers, especially in a challenging market.

Inside the Data: Key Insights from the First Half of 2024

Data from the first half of the year shows just how many ways carrier selection impacts service performance.?

Key insights include:

• Carriers with more volume delivered the best performance
• Fleet size will impact service?
• Carrier utilization matters
• Rates were correlated to service regionally

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Carriers With Better Service Earned More Volume

Carriers in the top 5% of shippers' networks by volume outperformed everyone else. Top carriers had 17% better service scores on average than those in the bottom 50%, underscoring the importance for carriers to prioritize service level performance to get more traction with enterprise shippers.

Fleet size impacts performance

Fleet size matters according to our data. Smaller fleets outperformed much larger carriers in consistency and reliability. This demonstrates the importance of prioritizing mutually beneficial relationships when possible, whether you are a broker or a shipper. Some fleets are set up to, or more incentivized to, deliver better service for you.

Carrier utilization matters

Brokers who established ongoing relationships with carriers saw stronger service levels. When you focus on carrier re-use, there are a number of benefits for your operation, and improved service reliability is one of them.

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You get what you pay for regionally

Not surprisingly, the average total cost per mile varies by origin region due to fuel prices, insurance, and maintenance costs. However, a significant share of total costs per mile is typically driver wages. A fair wage provides motivated and dependable drivers, which, in turn, leads to efficient processes on the operational level.

The average total cost per mile is highest in the Midwest at $3.08 per mile, where we also see the highest overall ISO Score, followed by the South at $2.81 and the lowest, at $2.29 in Canada.

ISO Service Benchmarks: A First Half of 2024 Overview

ISO’s benchmark report offers several charts illustrating allowing shippers and brokers to compare their service levels against the market. They also underscore the hidden costs associated with poor transportation service.

For example, in the Broker Service Index Benchmarks, note that the average incremental cost of a bad bounce was nearly $170 based on the recovery rates alone during the first half of this year. Service failures, like bad bounces, come with a major cost.?

Unknown or new carriers were found to be 8% more likely to bounce a load, which is why learning a carrier's strengths and building mutually beneficial relationships with trusted carriers is so important.?

Minimizing bad bounces by selecting reliable carriers can save brokers from unnecessary financial losses.

ISO Shipper Service Index Benchmarks

This data is based on the standardized service metrics ISO measures across our network of enterprise, Fortune 1000 shippers. The data is pulled from January 1st - June 30th, 2024.

Note: The ISO Score for shippers is a composite score intended to benchmark overall service reliability and performance. It is a 0-100 composite of standardized service KPIs On-Time Pickup, On-Time Delivery, and Tender Acceptance.

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View Full Shipper Benchmark Report here

ISO Broker Service Index Benchmarks

This data is based on the standardized service metrics ISO measures across our network of Freight Brokers and Logistics Service Providers, based on the underlying performance of their carrier networks. The data is pulled from January 1st - June 30th, 2024.

Note: The ISO Score for brokers is a composite score intended to benchmark overall service reliability and performance. It is a 0-100 composite of standardized service KPIs On-Time Pickup, On-Time Delivery, and Bounce Rate.

View Full Broker Benchmark Report here

Implications for Brokers and Shippers?

Optimizing freight service levels has become crucial for businesses striving to maintain a competitive edge. While price remains a significant factor in transportation decisions, focusing solely on cost can lead to compromises in reliability and speed. As such, shippers are increasingly prioritizing on-time deliveries and consistent service and are turning to brokers for assistance.

The proliferation of On-Time In-Full (OTIF) and vendor compliance programs has also heightened the expectations placed on brokers and necessitates that brokers maintain strong relationships with carriers and implement robust tracking and reporting mechanisms to ensure that performance aligns with the needs of their customers.

Brokers can take several actionable steps based on key factors identified in ISO’s data:

1. Invest in technology that enhances visibility and tracking capabilities.
2. Regularly gather and analyze client feedback to identify pain points and areas for improvement. By actively engaging with shippers to understand their needs and adapting their services accordingly, brokers can foster stronger relationships and demonstrate a commitment to quality.
3. Learn the strengths of the carriers in your network. The key to establishing partnerships with reliable carriers is to show them that you understand their needs, and strengths, and are serving them mutually beneficial freight.

To improve their overall network performance and eliminate hidden costs of service, shippers should:

1. Prioritize reliability and consistency for their most important and valuable customers. Not all lanes require white glove service, but you need to understand the ones that do so you can give that freight to the carriers you know value your business most.
2. Ensure you understand the vendor compliance programs of your customers and can trace that back to your carriers' service performance.
3. Regularly scorecard your carriers, and give them a seat at the table via regular performance reviews and QBRs.

Catch the rest of the H1 2024 benchmark data here

Let us know what you think! What data would you like to see next month?

-Team ISO