Every shipper in 2019 should have an understanding of their shipping profile. Depending on how much data shippers have and their disposal, these outlines can range from rudimentary to enormously detailed. And generally, the more detailed, the better: Shipping profiles are essential to companies’ ability to operate effectively and increase efficiencies on an ongoing basis.
But shippers aren’t the only ones watching their profiles. Carriers look at them too.
Carriers want to understand how well a potential new shipper will align with their existing package network. Under the surface, however, they also want to use shipping profiles to their advantage. Carriers can use data-driven analytics to offer certain companies perfectly tailored “unique” discounts — ones that don’t eat into their profit margins, but still look like bargains to shippers.
Understanding the shipping profile is key to strategic and tactical planning for shippers, of course. But it’s also critical to carriers’ success.
What is included in a shipping profile?
Think of a shipping profile as something like a chart of a patient’s vital signs. Those numbers don’t tell the doctor everything about the patient. But to someone who knows how to read the chart, it can suggest a great deal about the patient’s health, challenges he might be facing, or things he might need to change.
A shipping profile works the same way. It’s not a brochure for investors or a customer-facing website. In its simplest form, it is a summary of shipments sent and received, that breaks those shipments down by size, weight, zone distribution, accessorial surcharges applied, and a host of other categories.
A thorough shipping profile can include millions of detailed data points. Those can include pricing agreements, service guides, service types, pickup locations, deliver locations, and other quirks of shipments found on invoices.
The sheer quantity of data points in a detailed shipping profile can make it seem unwieldy. But as with all data, volume is power: The more you know, the more powerfully you can harness that data to reveal trends.
Understanding those process trends can allow savvy shippers to conduct both predictive and prescriptive parcel-level analysis. Using those results, they can implement operational efficiencies that smooth their internal processes and better organize shipments.
In the long run and at scale, small tweaks that boost efficiency can save shippers a lot of money.
What do carriers do with this information?
It’s easy to understand why a supply chain leader would want to understand his own company’s shipping profile. Normally, we think of our shipping carriers as the least likely source of savings — it makes more sense to streamline internally, then approach carriers to negotiate leaner contracts, right?
Not necessarily.
Carriers think about their contracts in bulk. Not only do the parcels of Company A need to move from San Diego to St. Louis; but Company B is shipping from San Diego to Phoenix, and Company C from Phoenix to Denver. How can a carrier organize these shipments to burn as little fuel as possible, while fulfilling their promises to shippers?
Carriers use Big Data, an amalgamation of many shipping profiles, to identify common shipment characteristics and define their standard shipments and routes. They build their networks according to those shipping profiles.
Then, when carriers take on new shipping clients, they study their shipping profiles to understand how well shippers’ needs will align with their existing networks. Carriers model how new shippers’ parcels will move through their network, identifying potential touchpoints and calculating the costs of any risks associated with handling those shipments.
Additionally, carriers can use shipping profiles to game shippers — although that’s not how it looks. Often, carriers offer shippers what appear to be custom discounts, tailored precisely to their needs. And often, these discounts are indeed custom-tailored. But carriers aren’t only thinking of shippers. Because of how much data they have access to, carriers are able to offer shippers discounts on one aspect of their shipping bill, while knowing that another part of the bill is likely to increase or is increasing already.
In other words, carriers can use shipping profiles to make shippers happy while ensuring they protect their profit margins.
What should shipping-based businesses do with their shipping profiles?
Shippers can’t hide their shipping profiles from their carriers — after all, carriers have access to all the information contained in shippers’ invoices, and can do much of the same analysis that shippers do.
But that doesn’t have to mean shippers have the upper hand. Shippers can (and should) still use shipping profiles to inform internal changes to their processes. And shippers can take advantage of the expertise of third-party shipping consultants, like the team at Reveel. Our consultants are former industry insiders who can shed light on carriers’ strategies and pricing models. We can use your shipping profile to identify inefficiencies and coach you through contract negotiations, as you decide what fees to target and what discounts to ask for.
And if your shipping profile isn’t as sophisticated as you’d like it to be, we can set you up with our 45-point invoice audit. Reach out today for a free invoice audit to see how much information we can reveal.
