The Total Economic Impact of Managed Transportation: 251% ROI

July 29, 2021

8 min read

RESOURCES // BLOG

Companies across North America are seeing transportation costs rise as a percentage of their total costs. That’s driving a need for many business leaders to closely oversee their transportation spending.
Total Economic Impact of Managed Transportation: 251% ROI and freight cost savings, according to independent study commissioned by Transportation Insight.

Of course, this requires easily accessible visibility to all those transportation activities. It also takes a keen eye focused on opportunities to improve your current managed transportation performance – and your service to customers.

To help small and mid-sized businesses identify the best support services available in a volatile freight transportation environment, we commissioned Forrester Consulting to complete a Total Economic Impact™ study of our Managed Transportation solution.

Forrester’s analysis identified some of the benefits our managed transportation brought one customer during a three-year period:

  • Freight and cost mitigation savings over $1.4 million; average annual LTL savings and cost mitigation of more than 10 percent of the annual transportation budget
  • Personnel cost savings exceeding $840,000
  • Transparency into freight costs allowing stakeholders to see all transportation spending in one place
  • Better on-time delivery to fulfill our customer’s specific shipping requirements, control costs and protect end customer experience
  • Technology tools supporting needs for specific capacity and special handling situations

According to the study, “Transportation Insight Managed Transportation provides managers with transparency into their total spend and allows them to see managed transportation not as a cost center, but as a source of competitive advantage.”

Let’s unpack some of the reasons the Forrester Consulting Total Economic Impact (TEI) study determined our managed transportation solution can deliver a 251 percent return-on-investment and $1.6 million net present value over three years. For an abridged version of the case study we commissioned, open our infographic.

Transportation Insight’s Managed Transportation solution delivers our customer a 251% ROI and a net present value of $1.6 million with a payback of less than 6 months.
Source: The Total Economic Impact™ Of Transportation Insight Managed Transportation

Managed Transportation Customer Testimony

Using its TEI methodology, Forrester interviewed the senior vice president with a Transportation Insight customer that provides school supplies and educational resources to its clients. Forrester based a three-year financial analysis on this conversation.

As Forrester’s interview revealed, transportation visibility is important as our customer:

  • Compiles products from several inbound resources into large shipments for outbound delivery
  • Aligns delivery within specific schedules for on-site work crews that offload, install and remove packaging refuse
  • Requires specialized equipment or wide trailers and doors.

“We’re very watchful of freight costs as they continue to go through levels we never thought they would,” our managed transportation customer said according to Forrester. “… It’s always at the top of the list when we’re monitoring expenses, so it’s easy to understand the reason we need a third party to provide these services.”

Need-Focused Transportation Solution

Prior to our partnership, this organization worked with another third-party transportation service that utilized a broker model to send most freight tenders through one preferred carrier. According to our customer’s comments to Forrester, this left many decision-makers wondering whether their organization was getting the best price or quality of service.

Considering a change, the organization sought a managed transportation provider that:

  • Works with multiple carriers on a pure cost and quality-of-service basis
  • Offers technology that allows a better view into freight spend to support full understanding of the cost of goods sold (COGS)
  • Provides carriers capable of meeting specialized needs of its shipping and installation services
  • Identifies additional efficiencies to reduce transportation costs on an ongoing basis

Forrester’s TEI analyzed how Transportation Insight’s managed transportation solution has been meeting those needs for the past three years. Elements of our solution considered in the TEI include:

  • Named enterprise service team including single-focus account manager a customer can call any time
  • Consolidated electronic billing
  • Customer understanding and improvement of standard operating procedure for each customer
  • Continuous improvement projects
  • Network simulation and modeling
  • Proprietary tools including:
    • Insight Freight (our freight audit and payment portal)
    • Insight Fusion (our business intelligence portal providing business analytics and reporting for actionable insights)

Based on the customer interview and financial analysis, Forrester determined a total present value of our solution at $2.23 million over three years. Compared to a cost of $632,000 during that time, the TEI determined a $1.6 million net present value of our managed transportation solution to our client.

Consolidated three-year, risk-adjusted metrics detail total costs, total benefits and cumulative net benefits of Transportation Insight’s Managed Transportation solution
Source: The Total Economic Impact™ Of Transportation Insight Managed Transportation

Findings: Managed Transportation Provides Freight Savings, Cost Visibility

According to the TEI’s key findings, Transportation Insight’s managed transportation solution provides quantified and unquantified benefits. Both are significant.

Our proprietary technology and processes, combined with our expertise across the less-than-load and truckload transportation environments, achieved savings on freight costs and cost mitigation of more than $1.4 million.

Using our transportation management system (TMS) bid board functionality, our customers can route shipments with the optimal, low-cost carriers that we help identify through a rating system based on their feedback. We also helped this customer achieve the best transportation costs on inbound freight shipments from its vendors.

“We put our complete confidence in Transportation Insight to manage that process and provide us good carriers at the best market prices,” said our customer’s executive, according to the Forrester study.

Findings: Managed Transportation Amplifies Personnel Efficiencies

It can be hard to quantify the benefit of technology applications like our TMS and our business intelligence and reporting tools. Still, transparency to freight costs and the cost of goods sold, as well as on-time delivery adherence delivers benefits across an organization, often in ways that mitigate future financial impact.

That said, implementing and managing a technology-enabled freight solution does come at a cost. And creating internal workflow efficiencies with easy-to-access reporting and streamlined execution realizes hard-dollar savings.

Forrester’s TEI determined that our managed transportation solution helped our client realize a personnel savings value of $847,214 over three years. That benefit represents the cost of personnel if our customer tried to develop and maintain an in-house solution to replace all the technology services and reporting we provide.

“The information that is in (Insight) Fusion  can be combined with our company information, and we can look at margin by carrier, margin by customer, and margin by lane,” our customer told Forrester according to the TEI we commissioned. “I can’t even conceive of all the ways we can slice and dice [the information].”

Quantifying Benefits Against Cost

Transportation Insight commissioned a Total Economic Impact study of our managed transportation solution to help shippers understand the cost, benefit, flexibility and any risk factors associated with this service offering.

I believe that the costs and risk factors of our managed transportation solution are far outweighed by the benefits – and we scratched the surface of those benefits above. But I also believe that shippers should have a clear view to the costs they incur when partnering for a new beneficial solution.

Transportation Insight’s fees depend on the customer, and they are often a combination of fixed transactional fees, subscription fees and/or savings share. Within the context of this managed transportation analysis, Forrester Consulting identified our fees over the past three years.

According to the TEI study, the total benefit of our managed transportation solution for this customer over three years is $2.23 million, compared to $632,000 paid in fees to Transportation Insight during that time. In this case, those fees varied from year to year based, in part, on the freight volumes our customer shipped during the period. Forrester concludes the payback period on this cost is less than six months for this client.

Transportation Insight’s solution delivered our customer $2.23 million in total benefits, including $1 million in personnel savings and $1.6 million in freight cost savings during the three-year period.
Source: The Total Economic Impact™ Of Transportation Insight Managed Transportation

That is an important benchmark for small- and medium-sized businesses. We know our customers often compete with larger shippers that possess the scale and capital to invest in a more complex transportation management platform. So we are focused on providing hybrid-digital solutions that make transportation control and visibility accessible to a broader market.

That is translating to managed transportation solutions that we are implementing in a matter of weeks and delivering return for our customer almost immediately thereafter. For this shipper, based on the TEI analysis, that Year 1 return was an $811,305 net value.

To learn more about the benefits and cost analysis of our managed transportation solution, download the Forrester Consulting Total Economic Impact™ of Transportation Insight Managed Transportation study.

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Clay Gentry

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