The best LTL KPI for measuring cost performance is cost per pound. The less than truckload (LTL) cost per pound KPI is easy to calculate (see below). The LTL cost per pound is also completely transparent (can’t tweak the numbers) and it provides great insights into a company’s freight spending.
Logistics Key Process Indicators (KPIs)
LTL KPI – Cost per Pound Calculation
To calculate the cost per pound KPI, take the cost of the shipment and divide it by the shipment weight (pounds).
Example: $507.34 divided by 1440 lbs. equals $0.35 cost per pound.
Cost per pound will vary between $0.06 and $0.75 with most shipments falling in the $0.22 – $0.42 range. Lower cost per pound is obviously better because it means the shipments were less expensive.
Insights from Cost Per Pound
One of the reasons, to use LTL KPIs is to know whether the shipping function is improving. The KPI gives the shipper an objective measure to compare freight rates, different weights, freight class, carriers and shipping locations.
Without the cost per pound KPI, it is difficult to analyze LTL freight costs. In lieu of the KPI, shippers can only compare the prices for the same shipping lane. Cost per pound for LTL shipments will vary depending on the freight class, carriers, and pick-up and delivery points.
The cost per pound metric can be used to compare individual shipments, carriers, and even weekly invoices.
Additional Reading on LTL KPIs
White Paper: The Essential Guide to LTL Shipping Improvement: Action Plan and Metrics for Rapid Transformation