>>
How
Yield Management
drives net revenue and
profits to meet the
target of
NextLeap
Supply Chain Solutions that Deliver.
What is Yield Management?
Yield Management is a combination of
improving top line (gross) revenue while
reducing transportation cost. The
consequence is higher net revenue.
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Example: Effect of a 1% Change
A 1% increase in top line (gross) revenue combined with a 1% decrease in
transportation cost will drive a 7% improvement in net revenue.
Top Line (Gross) Revenue
$100
vs. 1% improvement
$101
Transportation Cost
70
69
Net Revenue
30
32
% Net Revenue Improvement
$2/$30 equals 7%
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Yield Management Opportunities
• Revenue Improvements
• Cost Reductions
These apply to both air and ocean forwarding
(exports and imports)
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Revenue: Assessorial & Cartage
• Assessorial revenue equals approximately 30% of a
branch’s Net Revenue. Review your assessorials to
ensure they are current to the marketplace.
• Review your cartage rates to local ACI (standard)
rates to make sure they are current to the
competition.
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Revenue: Selling rates and
Dimensionalization
• Review your transportation sell rates to the market to
optimize top line revenue.
• Make sure your operations staff dimensionalize all
cargo.
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Revenue: Rates, Surcharges and Upgraded
Services
•Understand the rate profiles on all accounts
particularly major accounts. Many times they allow for
additional charges for services performed.
•Pass through in full, all carrier surcharges (fuel, etc.)
•Train your staff to sell upgraded services. Premium
services carry much higher margins.
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Cost Reduction: Gateways
•Utilize gateways wherever possible. The gateway
transportation costs are generally 10¢ - 20¢ cents per kg
less than direct shipments. Gateways often are able to
kill all volume through containerization.
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Cost Reduction: Global Partners
•Use global carrier partners. UTi receives significant
rebates from carriers. Many times a few thousand dollars
of extra business to that carrier can make the difference
in UTi achieving the next higher level of incentives.
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Cost Reduction: Cartage and Line Haul
•Make sure to bid out local cartage and line haul fees.
Try and concentrate as much business with a single
vendor as possible to leverage your buying power.
Negotiate, negotiate, negotiate.
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Cost Reduction: Spot Rates and Experts
•Call for spot rates on large shipments from your carrier and
from your gateway manager
•Use the internal company experts to assist you (like Bob
Gotkin on air and Chas Deller on ocean).
•Follow IATA guidelines when subtracting weight of wooden
pallets from shipment weight when tendering MAWB to
carriers.
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Act Today to Improve Yield
In Freight Forwarding, managing yield has
the greatest impact on branch
profitability.
Take urgent action today!
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