15 Shipping KPIs to Track when Choosing a Logistics Provider

When it comes to running a successful ecommerce business, choosing the right logistics provider can make all the difference. Your shipping partner isn’t just responsible for getting your products from point A to point B—they also play a big role in providing a positive customer experience.

Shipping-related issues like late deliveries, damaged products and high shipping costs can negatively impact your bottom line.

This is where tracking shipping KPIs can help you choose the right logistics provider for your business. Only when you’re confident that your products will be delivered on time, in perfect condition and at a fee that makes sense to your business, should you sign on the dotted line.

In this blog, we’ll discuss why you need to track shipping KPIs and 15 key ones to keep your eyes on when choosing your logistics provider. 👇

What are shipping KPIs?

Shipping key performance indicators (KPIs) are metrics used to evaluate the performance of logistics operations. These KPIs measure different parts of the logistics process, like transportation and delivery of goods. By tracking shipping KPIs, you can measure the efficiency, service quality, cost management and operational effectiveness of a logistics provider.

Importance of tracking shipping KPIs

As a business owner, tracking shipping KPIs when choosing your logistics provider is essential to make sure your operations run smoothly and efficiently.

Imagine partnering with a logistics provider without a solid track record in on-time deliveries. This could lead to delays, dissatisfied customers and a potential loss of business.

Plus, if your provider damages items in transit, you could be looking at higher return rates and shelling out more for replacements. Moreover, if they’re not great at managing costs, you might end up paying high shipping fees that cut into your profits.

By monitoring shipping KPIs, you can choose a logistics provider that meets your needs and ensures reliable service to customers.

15 shipping KPIs to track when choosing a logistics provider

When choosing a logistics provider, tracking too many KPIs can be overwhelming. To simplify, focus on 5 high-level KPIs and within each, prioritise 3 key metrics to ensure you stay on track. 👇

Delivery performance

These shipping KPIs indicate whether a logistics provider can meet your customer’s expectations for on-time deliveries.

1 - On-time delivery rate

This metric shows how many shipments were delivered within the promised time.

You can measure it using the formula:

On-time delivery rate = No. of on-time deliveries / total no. of orders X 100

For example, if a logistics provider shipped 500 orders in a month and 450 of them were delivered on time, then the on-time delivery rate would be 90%.

A high on-time delivery rate shows that the logistics provider is reliable and can meet deadlines.

2 - Transit times

Transit time simply refers to the average time it takes for a shipment to reach its destination. The shorter the transit time, the quicker the order fulfilment.

Formula to measure transit time:

Average transit time = Total transit time of all shipments / Total no. of shipments

For example, if a logistics provider has 10 shipments with a total transit time of 50 days, the average transit time would be 5 days.

Tracking this metric helps you measure the speed and efficiency of a provider.

3 - Order accuracy

This shipping metric measures the percentage of shipments that contain the correct items.

Formula to measure order accuracy:

Order accuracy = No. of accurate orders / Total no. of orders shipped X 100

For example, if a logistics provider shipped 1,000 orders and 990 of them were accurate, then the order accuracy rate would be 99%.

The high order accuracy of a logistic provider makes it less likely that items will be returned or exchanged.

Cost efficiency

These logistics KPIs tell you how well a logistics provider manages the costs of shipping. Partnering with a provider that's cost-efficient can lower your operational costs.

4 - Shipping cost per order

This metric tells you how much it costs to ship each order on average. Keeping an eye on this helps you reduce shipping costs, so you can make a profit.

5 - Freight cost per unit

Freight cost per unit lets you track how much it costs to ship each unit. This helps you understand the cost structure and price your products more accurately.

6 - Cost per mile (CPM)

This calculates the expense per mile travelled, which is crucial for businesses with long-distance shipping needs. Lower costs per mile can significantly reduce overall shipping expenses.

Quality of service

Quality of service KPIs provide you with a comprehensive measure of the customer experience during the shipping process. Focus on the following 3 metrics to measure how good the service is:

7 - Damage rate

This metric measures the percentage of shipments that arrive damaged. A low damage rate indicates that the logistics provider handles goods with care.

Keeping tabs on this metric is crucial for maintaining product integrity and customer trust.

8 - Customer satisfaction score (CSAT)

CSAT reflects how customers feel about the whole shipping process, from order placement to delivery. If the CSAT scores are high, it means the provider is providing a good experience.

9 - Return rate

This metric tracks the percentage of shipments returned due to issues like incorrect items or damage. A lower return rate means there are fewer mistakes and customers are happier.

Operational efficiency

This logistics KPI shows how well a logistics provider's operations work. This is important because it helps you identify bottlenecks in their operations and make sure there are no delays to order fulfilment.

10 - Fulfilment time

This metric tracks the time taken from receiving an order to shipping it out. The smaller the fulfilment times, the quicker the deliveries.

11 - Tracking accuracy

Accurate and timely tracking information is essential for providing customers with reliable updates on their shipments. High tracking accuracy reduces customer enquiries and enhances trust.

12 - Shipping error rate

This metric measures the frequency of shipping errors, such as incorrect addresses or items. This is different from order accuracy as this metric only measures errors that occur during the shipping process, whereas order accuracy measures errors from the moment an order is placed.

Formula to measure shipping error rate:

Shipping error rate = No. of erroneous orders / Total orders shipped X 100

Lower error rates mean fewer problems in the supply chain and smoother operations.

Claims and disputes

This shipping KPI tells you how well a logistics provider handles issues that arise during the shipping process, such as damaged products or lost shipments.

13 - Claims processing time

This metric tracks the average time taken to process and resolve shipping claims. Faster processing times show how well a provider handles problems and reduces the impact on your business.

14 - Claim resolution rate

This shows how many claims were settled in the customer's or company's favour. A high resolution rate reflects the provider’s commitment to resolving disputes fairly and promptly.

15 - Percentage of claims

This metric shows the proportion of shipments that result in claims. A lower percentage suggests that the provider has fewer issues with lost or damaged goods.

Conclusion

There's no doubt that choosing the right logistics partner is one of the most important decisions for your business and customer experience.

And you can find the perfect match for your company on Builder Marketplace, which has a range of logistics integrations, all tailored to fit different needs and budgets.

Here are some of the key features of choosing your partner with ‌Builder Marketplace:

One-click integration - get one-click logistics integration directly from Builder Studio
Auto-account creation - skip manual account creation; set up your partner account automatically
Custom solutions - get solutions tailored to meet the unique requirements of your business
Quick implementation - get your logistics integration up and running in no time
24/7 support - access round-the-clock expert support to for any integration issues

Get in touch with our team to explore how Builder Marketplace can help your business 👇