KPI of the Day – Logistics: % Transport capacity utilization
Measures the percentage of the transportation capacity used, out of the total weight transport capacity available.
To assess the effective usage of transportation capacity, or in other words, how well/efficient the available transportation storage space is used.
Regardless of the transportation channel – air, water or land – the issue of low % Transport capacity utilization is widespread, bringing along high annual losses for companies worldwide. Transportation is a vital process to ensure the movement of goods, employs a large workforce and positively contributes to economic growth.
This KPI is a suited measure of transport efficiency, as it indicates how well resources are utilized by operating companies in the logistics/distribution sector. High values for this indicator drive profitability for the logistics and distribution company. They also lead to lower prices and increased customer satisfaction.
Furthermore, environmental regulations worldwide impose the reduction of CO2 emissions. This exerts pressure on distribution companies to increase their % Transport capacity utilization rates.
Given these considerations, some of the best industry practices are as follows:
- Engaging in collaborations with other shippers for advantages such as being able to offer additional services, ensuring a better geographical coverage and volume exchange;
- Managing cost reductions through combined marketing initiatives and investments;
- Improving asset utilization through Big Data and predictive analytics, which enables the forecasting of future volumes for a more accurate planning.
Some of the variables that are often used to determine storage utilization include the following:
# Total available transportation storage space (raw storage); % Time-averaged raw storage used; % Raw storage used at times of peak demand; % Available storage space in each storage volume; % Time-averaged storage used in each volume; % Peak-demand percentage of storage used in each volume; # Time during peak-demand periods required to store or retrieve an item of a given size; # Average size of items stored or retrieved; # Economic value of items handled by the business.