Freight and Logistics Management: What Good Looks Like vs What Bad Looks Like
Freight and logistics management became a board-level conversation in 2021 and remained one in 2022. Container rates at peak were more than ten times their pre-2020 levels. Port congestion in major hubs added weeks to transit times. Air freight capacity was constrained. Many organisations discovered that their logistics function — historically treated as a transactional back-office operation — was now a significant variable in cost, customer service, and production continuity. The contrast between organisations that managed these conditions well and those that did not was visible. The differences were not mainly about size or budget — they were about how logistics was treated structurally and what disciplines were in place before the disruptions hit.
What Good Looks Like
Maintains multi-mode optionality. Organisations that managed freight volatility well were not locked into a single mode or a single carrier. They had pre-established relationships and rate agreements across ocean, air, and land, and could flex between them as conditions changed. Switching from ocean to air when a container backlog builds requires pre-existing relationships, not emergency negotiations.
Tracks freight costs as a proportion of total product cost or project budget, not as a fixed line item. When freight costs are a known proportion, a doubling of rates has an immediate, quantifiable impact on landed cost. When freight is treated as a fixed overhead estimate, cost overruns arrive as surprises.
Uses shipment visibility tools to track in-transit inventory. An organisation that knows where its in-transit stock is at any time can make better decisions about expediting, re-routing, or adjusting production schedules when delays emerge.
Specifies Incoterms clearly in supplier contracts. The Incoterms rule in a purchase order determines who bears freight and insurance cost and risk at each point in the transit. Unclear or missing Incoterms create disputes at the moment when supply chains are already under pressure.
Reviews freight performance data regularly. On-time delivery rates, transit time variance, freight cost per unit, and damage rates are the metrics that reveal which carriers and which routes are performing and which are not.
What Bad Looks Like
Relies on a single preferred carrier or freight forwarder with no backup arrangement. Single-source logistics is as fragile as single-source supply. When the preferred carrier runs out of capacity, the organisation discovers there is no alternative pre-arranged.
Books freight on the spot market only, with no contract rates or volume commitments. Spot market rates are the most volatile. Contract rates provide predictability in exchange for volume commitments. Organisations that book everything on spot are maximally exposed to rate spikes.
Treats Incoterms as a formality. "We always do EXW" or "we always do DDP" without evaluating whether the arrangement is appropriate for each shipment leaves money and risk management on the table.
Has no visibility into in-transit inventory. When a shipment is late, the organisation first needs to locate it, then determine the cause, then decide how to respond. This process takes days without visibility tools — days that often determine whether a production line runs or stops.
Does not track freight cost as a managed metric. Freight is treated as a cost of doing business that cannot be influenced. In an environment where freight represents 10 to 20 percent of landed cost, that assumption is expensive.
XNM helps public-sector and capital-project clients build procurement and supply chain frameworks that address freight, logistics, and contract management disciplines. Reach out to XNM's procurement, sourcing & contract management team to assess how your organisation is managing freight risk and cost.