Carrier Performance Evaluation: 7 Carrier KPIs You Should Be Tracking

So you’ve done your homework on shipping surcharges, negotiated your carrier discounts, and chose a carrier that best serves your (and your customers’) shipping needs. All big achievements that can be undermined if you don’t make sure your carriers are fulfilling their promises.

You could be managing a growing brand, running a 3PL, or even launching a warehouse management tool that incorporates shipping rates. No matter what your shipping profile is, you need to build regular carrier performance evaluations into your annual processes to ensure you’re still working with the best carrier partner for you.

In this article, I’ll cover seven important points to check your carriers on regularly. Use these key performance indicators (KPIs) to reassess carrier fit and renegotiate carrier contracts as needed.

The 7 Most Crucial KPIs That Define Carrier Performance

Carrier KPIs are metrics that measure how well your provider is meeting agreed targets. They highlight service quality, cost efficiency, and reliability, so you can get a clear view of whether the carrier is supporting or hurting your business goals.

Here’s what to focus on as you begin your partnership.

1) Cost per parcel

Cost per parcel measures the total cost of shipping a single package. Broken down, it typically includes base transportation rates alongside any additional surcharges

Some things to look out for in your parcel costs include;

• Fuel surcharges
• Residential delivery fees
• Oversized or overweight fees
• Additional handling fees
• Customs duties
• Dimensional weight adjustments
• Accessorial charges

Knowing your landed shipping costs and being able to break down parcel shipping fees by zone, service level (delivery speed), dimensions, and any other shipping characteristics helps you find out where your most expensive shipments are.

For example, does one carrier consider the box of your best-selling package oversized, and another considers it standard? These insights will help reveal exaggerated costs in one area between different carriers.

2) On-time delivery rate

On-time delivery (OTD) rate measures how often your carrier delivers packages on or before the expected delivery date. This is a crucial metric for gauging your chosen carrier’s efficiency, as it shows how reliable they can be in meeting customer expectations.

To compute this KPI, you can use the following formula:

On-time delivery rate = (Count of on-time deliveries / Total number of deliveries) x 100

According to internal iDrive metrics based on an analysis of 100,000 shipments via carriers such as UPS, USPS, FedEx, Amazon Shipping, FLS, and DHL, the average on-time delivery rate you should expect is 97.5%. If you’re seeing OTD rates of 94% or lower, consider bringing this up to your carrier(s) the next time it’s time to renegotiate carrier contracts.

3) Transit time accuracy

This KPI measures how consistently a carrier meets its promised delivery date. Most shipping carriers provide an estimated delivery time for when a package will reach the recipient.

If the package arrives on or before that date, it reflects positively on the carrier’s reliability and consistency. However, if deliveries are frequently late, it indicates inefficiency and can impact customer satisfaction.

This metric is slightly different from OTD because it gauges how accurately a carrier can predict actual delivery windows (rather than beating their expected time). These are critical when you’re shipping time-sensitive products, such as items that need to be refrigerated, or pharmaceuticals.

In the cases above, transit time accuracy is even more important than OTD, because your customers need to know the exact dates to expect their packages, and an early delivery will not be a happy surprise.

4) Claims and damage rates

Picture this: a customer’s package arrives on time, but when they open it, the contents are damaged. It’s a disappointing experience. The question is, who is accountable? This is where claims and damage rates can help.

To calculate your claims and damages rate, use the following formula:

Claims rate = (Number of claims / Total number of packages shipped) x 100

The higher a carrier’s claims and damage rates, the more likely they aren’t handling shipments properly. In some cases, it can also indicate a lack of dunnage or protective packaging, so take a close look into the claims reasons.

This KPI helps you understand how often a carrier loses packages or delivers them in poor condition. This information actually helps you reclaim some of your revenue, whether from the carrier, an insurance provider, or both.

It’s another metric where, if you are seeing an unusually high claims rate, you can bring that to your carrier negotiations. At iDrive Logistics, we recommend aiming for a claims rate of one percent or less. However, the industry standard states between one and three percent is acceptable.

5) Accessorial and hidden fees

In an ideal world, published carrier rates (and contracted discounts) would paint the full picture in shipping. However, many carriers have different accessorial and hidden fees, and these unexpected costs can quickly inflate your shipping expenses if not managed carefully.

One example is fuel surcharges, which now account for 25% to 40% of total shipping costs. In additional, many carriers adjust their fuel surcharges regularly, making it one of the most unpredictable fees you need to consider when choosing a carrier, negotiating your rates, and monitoring your shipping spend.

Remember, carriers dictate their fees. They can add any fees or surcharges they want, and if you don’t play by their rules you may be relegated back to published rates with no discount at all.

Staying on top of any unexpected fees can help you choose a better carrier mix. Or, if you show those numbers to your carriers during contract renegotiation you can explain how the additional fees are impacting your business and ability to grow, and point to a specific dollar amount you didn’t account for in your business model.

6) Scan compliance

Spare your customer service team endless “where is my order” emails by keeping your customers well-informed throughout the shipping process.

Whether you’re a brand shipping to your customers, or a 3PL managing multiple brand shipments, providing a transparent delivery experience helps improve CX and loyalty.

You build trust through visibility, but this only happens when scan compliance is high, and so you can virtually view the package as it moves along your chain (and so can the end buyer to feel reassured).

7) Capacity during peak season

Q4 always feels like a scramble. Carriers are fighting for the parcel profiles they want (for example, they might favor items between 5 to 20lbs, and discourage packages they consider oversized), and shippers are fighting to get good service for their customers at reasonable rates.

The bottom line is, there isn’t enough space, time, and manpower to go around, so you need to make sure your negotiations and carriers have accounted for peak demand.

Seasonal surcharges can;

• Cause a sharp increase in shipments
• Slow down sorting and distribution
• Require additional staff
• Impact delivery reliability
• Raise shipping costs
• Affect customer expectations
• And much more

Because peak seasons happen regularly, knowing your carrier’s ability to keep up with your expected demands ensures you stay competitive when it matters, rather than having to change systems or processes during this profitable time.

Tip: See if you can negotiate peak season promises into your carrier contracts. For example, one carrier might demand most of your parcel allocation, but you might negotiate that during peak you are allowed to use other carriers at a higher rate to be able to meet demand.

How to Use These Carrier KPIs

KPIs, at the end of the day, are just numbers and patterns. When your cost per parcel is high, what does that imply? Or if you learned that your carrier isn’t able to handle large shipments, what’s your next step?

Tracking metrics alone doesn’t create value. It’s how you act on them that makes the difference.

Know what “good” performance looks like

How would you know what a good performance looks like if you don’t have a baseline? You need a benchmark. Without it, you could end up exhausting your resources, changing your strategies, or jumping through hoops, all to hit a target that’s completely out of reach.

So, the best way to get clarity is to know and understand what “good” looks like for your carrier. You can start doing that by:

• Seeing how other carriers handle similar volumes, routes, and peak seasons
• Taking note of your own data
• Comparing performance against industry standards
• Tracking customers’ shipping feedback and complaints

Once you have a solid understanding of what good performance looks like, you can turn that knowledge into action and make improvements that will benefit your business.

Identify patterns and recurring issues

You’ve probably heard the saying, “Fool me once, shame on you; fool me twice, shame on me.” It applies perfectly to KPIs. One late shipment might not hurt your brand too much, but if it keeps happening, that’s when you need to stop and ask, “What’s going on?”

Patterns and recurring issues are part of a bigger picture. Think of it like a puzzle; each piece reveals what’s really causing the problem.

For example, you have noticed that claims and damage rates for fragile items have increased over the past few months. This could be due to packaging errors or mishandling during transit. How do you figure out the real cause? Review your packaging process and check with your carrier to identify where the issue is.

Only by seeing the complete picture can you make the decisions necessary to prevent lost business.

Optimize your carrier mix

When you optimize your carrier mix, you don’t just pick carriers on a whim. Instead, you use the carrier data you have to make informed decisions. With this information, you can:

• Find out which carriers perform best under different conditions
• Identify which carriers provide the best balance of cost and service
• Match the right carrier with the right shipment
• Pivot your shipping strategies according to your needs

Tip: Contact iDrive for a free carrier mix analysis.

Improve the customer experience

At the end of the day, what do companies aim for? A seamless customer experience. Deliveries play a huge part in shaping that experience. On the eCommerce side, about 2 in 3 shoppers expect to receive their orders within a day.

So, as customers expect faster and flawless deliveries, carrier KPIs are now your secret weapon to meet those expectations.

You should be:

• Monitoring delivery times to ensure orders reach customers as promised
• Tracking damage and claims rates to address any handling issues
• Using performance data to provide real-time updates to customers
• Informing customers about potential delays or issues before they even happen
• Matching your current needs to suitable carriers

Achieve Reliable, Cost-Effective Shipping With iDrive

The bottom line? Your carrier KPIs aren’t numbers alone. They show you the next step to provide a better service, not just for you, but for your customers, too!

With a growing brand in a competitive landscape, it’s even more important to understand KPIs and know whether you’re improving or not. But, even then, understanding alone isn’t enough. You need to act on it.

At iDrive Logistics, our mission is to help brands simplify shipping, lower costs, and improve their delivery experience.

With years of experience in the shipping and fulfillment space, we combine our carrier expertise with advanced logistics platforms and data-driven insights to help brands optimize their shipping and deliver exceptional customer experience.

Book a call with our team today, and let’s talk about how we can support your shipping strategy.

About the Author

Jon Howard is a CX Manager at iDrive Logistics. As an experienced transportation advisor and customer success professional, he’s passionate about building lasting relationships and helping clients succeed. At iDrive, Jon works closely with shippers to create a diversified, optimized carrier mix that drives efficiency and growth.