What if you could reduce your company’s shipping spend by 10% or more? For three out of four shippers, this isn’t just a possibility—it’s a missed opportunity. These savings aren’t found by simply asking for a better discount; they’re uncovered by identifying specific gaps between your contract and what the market offers. Without a clear view of what your peers are paying, you’re likely overspending on surcharges and missing out on key concessions. The practice of Benchmarking Transportation Rates shines a light on these hidden costs, providing the clarity you need to optimize your spend and secure a truly best-in-class carrier agreement.

Have you been told by your carrier representative that you have the best pricing in the area? That you negotiated discounts and concessions that no one else gets? Is the sales rep telling the truth, or is it just a negotiation line? Of course, not everyone can have the best rates. How can you be certain your rates are truly best-in-class? By benchmarking your program against other shippers. Imagine how your carrier contract negotiations would change if you knew you were getting the worst incentives in the area; or that three quarters of peer companies had negotiated a discount on a surcharge, the same surcharge the carrier rep told you is never discounted. The reality is three out of four shippers could improve their transportation discounts by 10% or more. Through rate benchmarking, you gain an understanding what’s truly possible and how your rate programs compare with others. Most importantly, this information will increase the likelihood of negotiating significant improvements to your carrier agreements.

Book A Demo

Why Benchmark Your Transportation Rates?

The benchmarking concept is simple: Monitor your company’s internal measurements, and compare this data with other leading organizations. Gaps between a company’s actual performance and the performance of industry leaders become opportunities and are utilized to develop improvement plans. Benchmarking not only includes measuring and improving performance, but also involves the evaluation of progress and trends over time to achieve target objectives. Effective use of benchmarking enables shippers to enjoy an advantage over competitors now and into the future.

Gain a Competitive Edge

In the world of high-volume shipping, you’re not just competing on product quality; you’re competing on logistics. Freight benchmarking gives you the market intelligence you need to manage costs effectively and see how your shipping strategy stacks up against others. According to Xeneta, this intelligence helps companies “manage costs, understand what competitors are doing, and find the best shipping routes.” When you know what your competitors are paying for similar services, you gain incredible leverage. This isn’t about getting a “good” rate—it’s about securing a rate that gives you a real advantage. Armed with this data, you can walk into carrier negotiations with confidence, knowing exactly what discounts and incentives are possible because you’ve seen what your peers have achieved. This insight is key to turning your shipping operations from a cost center into a competitive weapon.

Identify New Business Opportunities

Benchmarking does more than just trim costs on your existing routes; it can uncover entirely new strategic opportunities. By analyzing comprehensive market data, you might discover that a regional carrier offers significantly better rates and faster delivery times for an emerging market you’re targeting. As Xeneta notes, “Benchmarking helps shippers get the best rates, use the right carriers and ports, and understand their contracts better.” This understanding can lead you to diversify your carrier mix, reducing reliance on a single provider and improving resilience. It might also reveal that switching to a different service level for certain products could drastically lower costs without impacting customer satisfaction, opening up new pricing strategies for your business.

Create Accurate Budgets for New Routes

Expanding your business into new regions or launching a new product line comes with a lot of financial uncertainty, especially around shipping costs. Guessing can be dangerous, leading to eroded profit margins or pricing that isn’t competitive. Benchmarking removes the guesswork. By comparing your shipping costs against what other companies are actually paying in the market, you can build precise, data-driven budgets. As Cass Information Systems explains, you can use this data “to set goals for negotiating better prices with shipping companies and to plan your shipping budgets.” This allows you to forecast expenses accurately, secure favorable terms for new shipping lanes, and ensure your expansion plans are profitable from day one.

Assess Environmental Impact

Today, a smart logistics strategy considers more than just the bottom line; it also accounts for environmental impact. Benchmarking can be a powerful tool for advancing your sustainability goals. The process often highlights inefficiencies in your shipping network, such as routes or modes of transport that are more costly and fuel-intensive than they need to be. For example, data might reveal an opportunity to consolidate shipments or shift from air freight to less carbon-intensive LTL for certain lanes. By pursuing modal optimization based on benchmark data, you can often reduce both your shipping spend and your carbon footprint, aligning your financial objectives with your corporate responsibility initiatives.

Step 1: Decide What to Measure

Data is at the core of effective benchmarking. In Step One, decide what aspects you need to benchmark, and in Step Two, against whom. There are many free or low cost online tools to compile data and survey benchmark partners. Select a tool, then develop a survey that solicits rate, service usage and contract information. Use strategies such as ranges and “yes or no” questions to circumvent direct disclosure of rate information. Develop questions regarding incentives by service level and weight breaks. Moreover, benchmark questions should seek to identify specific accessorial concessions, rebates, earned discounts, fuel surcharge discounts, guaranteed service refunds or performance threshold incentives, bonus weight (aka unlimited weight letter) programs, caps to annual rate increases and other carrier incentive programs. The survey should include questions about package characteristics and/or distribution patterns. Benchmark metrics such as zone, weight, delivery density, parcel dimensions, common package dimensions, commercial/residential mix, express/ground percentages as well as inbound/outbound percentages. Establish carrier mix to better understand the impact of single sourcing versus sourcing with multiple carriers. The survey should also identify annual expenditures, revenue bands, rolling averages, contract length, payment terms and any other important factors for consideration. Before finalizing survey questions, seek the input of potential benchmark partners. They might identify survey questions that you missed that can enhance the value of the benchmark data. Other resources include industry associations, networking groups, research studies and white papers, consultants, universities, government data, industry periodicals, libraries and online databases.

Distinguishing Between Freight and Rate Types

Once you’ve decided what to measure, it’s important to understand the context behind the numbers. Not all shipping is created equal, and the mode of transport and the type of rate you’re paying create entirely different benchmarks. Comparing your LTL rates to another company’s air freight costs won’t give you an accurate picture of your performance. To get a true sense of where you stand, you need to segment your data by freight and rate type, ensuring you’re always comparing apples to apples. This level of detail is what separates a surface-level glance from a deep, actionable analysis of your shipping spend.

Road, Sea, and Air Freight

Your company’s shipping profile is likely a mix of different transportation modes, each with its own unique cost structure, transit times, and service levels. Road freight, including LTL and truckload, operates in a completely different world than global sea or air freight. Effective benchmarking requires you to analyze your spending within each of these categories separately. This process also highlights opportunities for modal optimization, where you might be able to shift volume to more cost-effective modes without sacrificing service quality. By comparing your transport prices for road, sea, and air against current market data, you can quickly see if you’re getting a competitive deal for each specific mode you rely on.

Spot vs. Contract Rates

Understanding the difference between spot and contract rates is fundamental for any shipper. Spot rates are the one-time, market-driven prices you pay for immediate shipping needs. They can be volatile, fluctuating daily based on capacity and demand. In contrast, contract rates are negotiated with carriers for a set volume of freight over a longer term, providing stability and predictability for your budget. For most high-volume shippers, a well-negotiated contract is the cornerstone of a cost-effective logistics strategy. Knowing how your long-term agreements stack up against the market is why ongoing contract optimization is so critical for keeping your shipping costs under control.

Step 2: Find Your Benchmarking Partners

Now that you know what you’ll need to benchmark, identify other organizations within and outside your industry as potential benchmark partners. This can be the most time consuming part of the benchmarking process as it may take several conversations and multiple levels of approval to gain commitment from benchmark partners. The value for benchmarking partners, of course, is access to the same benchmarking information your organization seeks. Guarantee that all data will be kept anonymous, and ensure all benchmark partners will receive comprehensive results at the conclusion of the study. Share the survey questions with potential partners whether or not they commit to participating. Well designed questions that illicit responses in wide areas of rate and service benchmarking should inspire participation amongst your peers within each benchmark organization. If not, thank them for their consideration and politely move on to the next potential partner. Because there are so many unique organizational variables to benchmarking transportation rates – most notably wide variance in package characteristics, volumes and carrier mix – do not expect to find benchmarking partners comparable in all respects to your organization. It is very likely there is not a “perfect” partner. Don’t worry, if you get enough partners to participate, the data will reveal opportunities to improve your program.

Alternative: Using Third-Party Benchmarking Services

Let’s be honest, the process of finding partners and collecting data yourself sounds exhausting. It’s a significant investment of time and resources, and there’s no guarantee you’ll gather enough relevant data to make it worthwhile. A much more direct and powerful approach is to partner with a third-party benchmarking service. These firms have already done the heavy lifting, aggregating and anonymizing shipping data from thousands of companies across various industries. Instead of spending months trying to build a small comparison pool, you can tap into a massive, pre-existing dataset to see exactly how your rates stack up against your true peers. This gives you immediate access to the insights you need without the administrative headache.

Leverage Large-Scale, Invoice-Verified Data

The biggest advantage of using a third-party service is the sheer scale and quality of the data. While a DIY survey might give you a few data points, a dedicated service provides market intelligence based on billions of dollars in real shipping spend. At Shipware, for example, our platform analyzes actual carrier invoices, not just survey answers. This means the data isn’t based on what people think they’re paying; it’s based on what they are paying. This level of detail allows you to benchmark discounts and incentives with incredible precision, comparing your specific shipping profile against others with similar volumes, package characteristics, and geographic footprints. You can manage costs effectively because you have a clear, data-backed picture of what your competitors are actually getting from their carriers.

Ensure Data Reliability with a Confidence Index

Having a lot of data is one thing, but trusting it is another. Reputable benchmarking services provide a layer of validation, often through a confidence index or a similar reliability score. This helps you understand how closely the benchmark data matches your own shipping characteristics. A high confidence score means you’re comparing apples to apples, giving you solid ground to stand on during negotiations. When you can show your carrier representative that your rates are out of line with the market for shippers of your exact profile, your request for better terms becomes much more compelling. This data-driven confidence is crucial for successful contract optimization, transforming your negotiation from a guessing game into a strategic, fact-based discussion.

Step 3: Organize and Analyze the Data

Compile and map data for each survey question to identify mean and median values. It is often helpful to chart the data within quadrants. Lower quadrants reveal companies below the market, middle quadrants reflect market averages, and upper quadrants demonstrate best-in-class components. Segment the data to enhance comparability of peer groups. For example, shipment volume and expenditures have a significant impact on carrier incentives. In general, volume shippers have better rates than infrequent shippers. Apart from volume, package characteristics can widely affect carrier pricing. Segregate data for benchmark partners reporting similar package characteristics – like residential shippers – to enhance the value of the survey results. Be sure to forward benchmark results to partner organizations. Data anomalies and/or conflicting information may require additional discussion.

Go Beyond Rate Comparison with Market Intelligence

Once you have the data, it’s tempting to stop at a simple rate-for-rate comparison. But the real power comes from using this information as market intelligence. This means looking past the numbers to understand the context. Why are your competitors getting better rates? Are they using different carriers, routes, or service levels? Constantly analyzing these market dynamics allows you to shift from just reacting to problems to proactively planning your shipping strategy. This deeper understanding of your contracts and the broader market gives you a significant advantage, helping you lower costs and improve delivery speeds. It’s about transforming raw data into a strategic asset that strengthens your negotiations and overall supply chain planning.

Automate Analysis with Technology

Let’s be honest, manually gathering, organizing, and analyzing benchmarking data is a massive undertaking. By the time you’re done, the information might already be out of date. This is where technology becomes your best friend. Automated platforms can process huge amounts of shipping data, comparing your rates against current market prices in real-time. Instead of relying on a small survey group, these tools often use large, invoice-verified datasets to provide a much more accurate and comprehensive view of the market. Using a dedicated spend management portal gives you continuous access to these insights, letting you monitor performance, spot savings opportunities, and make data-driven decisions without all the manual effort. This approach turns benchmarking from a one-off project into an ongoing, strategic advantage.

Step 4: Use Your Data to Negotiate

Your analysis may have identified a gap between your Ground incentives (35%) and those of your benchmarks (say, 45%). Other gaps might include contract terms and specific accessorial concessions. Once you’ve identified tangible opportunities for program improvement – those areas in which your company’s results are well below comparable benchmark partners – develop a plan to pursue the contract components that will provide the greatest positive financial impact to your shipping costs. Armed with benchmarking information, you are now prepared to negotiate similar discounts and terms from the carrier. It is the ability to target a carrier’s rate response that makes benchmarking so invaluable. Consider shortcomings as both opportunities for improvement as well as watermarks for which to continuously aim. Measurements in which you lead the benchmark group validate your position as best-in-class.

Step 5: Continuously Evaluate and Improve

Step Five entails the ongoing evaluation of the benchmarking processes undertaken and the results of the improvements against objectives. It is important to document success criteria plus overall efficiency and effectiveness in order to accurately gauge whether your company is, indeed, obtaining its objectives. In the case of transportation rates, quantify cost reductions realized as well as the savings potential if a gap still exists with best-in-class programs. Best-in-class programs evolve over time. Work with your carriers to establish ongoing rate improvement goals, and include the non-incumbent carriers to promote market based competition.

Making Your Benchmarking Efforts Count

Benchmarking can be a lengthy process. Involve senior management early on to ensure you have resources and the ongoing commitment required to execute strategic benchmarking programs. Be careful not to spend too much time on one part of the process at the expense of other key elements. Utilize benchmarking results wisely by implementing the improvement programs that make the most economic sense to your company. Shippers within all pricing quadrants benefit from solid transportation rate benchmarks. Shippers in the lower quadrants should significantly improve their carrier pricing, while shippers with best-in-class pricing programs can focus on other areas of their operations, knowing they have secured the best transportation rates available.

Frequently Asked Questions

My carrier representative insists I already have the best rates. Why should I still benchmark? It’s a carrier rep’s job to make you feel valued, but their “best rate” claim often lacks the full market context. Benchmarking provides objective, data-backed proof of where your rates truly stand. It moves the conversation beyond assurances and into facts, showing you how your specific surcharges, incentives, and contract terms compare to what similar companies are actually paying. This gives you the leverage to know if you’re truly getting a great deal or if there’s significant room for improvement.

This DIY benchmarking process seems really time-consuming. Is there a more efficient way? You’re right, it can be a huge project. Finding willing partners, creating surveys, and analyzing data can take months of work away from your core responsibilities. A much more direct path is to work with a third-party service. These firms have already collected and verified shipping data from thousands of companies, giving you immediate access to a massive, reliable dataset without any of the administrative legwork.

What if I can’t find companies with a shipping profile that’s similar enough to mine? This is one of the biggest challenges of the do-it-yourself approach. It’s tough to find a perfect match, and a small, imperfect comparison group can lead to flawed conclusions. Using a third-party platform solves this by drawing from a vast pool of data. This allows you to compare your rates against a custom-built peer group with nearly identical shipping characteristics, from volume and package dimensions to geographic distribution, ensuring the comparison is truly apples-to-apples.

Is benchmarking only about getting a better discount on my base rates? Not at all. While base discounts are important, a huge portion of your shipping spend is tied up in accessorial fees, surcharges, and contract terms. Effective benchmarking looks at the entire agreement. It can reveal opportunities to waive certain fees, reduce fuel surcharge percentages, or secure more favorable terms on things like dimensional weight pricing, all of which can lead to savings that are just as significant as a better base rate.

How often should I be reviewing my shipping rates against the market? The shipping market is constantly changing, so benchmarking shouldn’t be a one-time event. Think of it as an ongoing health check for your logistics spend. A good practice is to conduct a deep analysis annually or whenever your contract is up for renewal. However, using an automated platform allows you to monitor your performance continuously, helping you spot trends and identify opportunities for improvement as they happen, not just once a year.