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by Hal Koss
Key Takeaways
- Freight spend analysis breaks down costs by lane, mode, carrier, and charge type to show where the money goes.
- Invoice line-item details are important because total charges alone can hide how much extra you’re paying.
- Comparing costs per mile, shipment, or hundredweight helps you evaluate lanes and carriers on a more consistent basis.
- A transportation management system (TMS) can simplify freight spend analysis by centralizing shipment data and providing built-in reporting and analytics.
A freight bill might be one number, but it represents a lot of smaller decisions. That’s where a freight spend analysis comes in. It breaks down that one number so you can see which lanes, modes, carriers, and charges are behind it. That way, teams get a clear view of where they stand and where they’re losing ground.
What Is Freight Spend Analysis?
Freight spend analysis is a review of what you paid to move freight over a certain period of time, broken down by lane, mode, carrier, and charge type. The goal is to explain your spend, so you can make more informed decisions for your shipping operation going forward.
Freight spend analysis is related to, but different from, two other concepts: freight audit, which checks individual invoices for errors; and freight benchmarking, which compares your rates with market rates for similar lanes.
A transportation management system (TMS) can make freight spend analysis easier by bringing shipment, carrier, and cost data together in one place. Depending on its capabilities, it can also generate reports that help teams identify opportunities to save.
What Data Do You Need for a Freight Spend Analysis?
To do a freight spend analysis, you need these data points, ideally going back at least six to 12 months. These may live across your carrier invoices, accounts payable, TMS, ERP, and carrier portals.
- Load ID, PRO, or BOL number
- Ship and delivery dates
- Origin and destination
- Mode and equipment type
- Carrier
- Weight, pallet count, freight class
- Miles
- Linehaul, fuel surcharge, and each accessorial as separate lines
- Tendered or contract rate
- Tender responses and appointment times
The goal is to capture the full cost of moving freight.
How to Analyze Freight Spend by Lane
Once you have the right data, you can break freight spend down to understand what you’re paying and where there are opportunities to save.
1. Gather and Clean Shipment and Invoice Data
Collect shipment records and freight invoices over the past six to 12 months (see the section above for what data to include). Make sure locations, carrier names, modes, and charge types use consistent formats and that invoices are matched to shipment records, with duplicates removed.
2. Define Lanes and Group Shipments
Group shipments by origin, destination, and mode. Decide how specific each lane needs to be (city-to-city, facility-to-facility, etc.)
3. Calculate Spend and Unit Costs for Each Lane
Summarize total freight spend, shipment volume, average shipment cost, and an appropriate unit-cost metric for each lane. You can do this manually with spreadsheets, or use built-in reporting with a TMS.
4. Compare Costs Across Carriers, Time Periods, and Benchmarks
Compare costs across carriers serving the same lane, review how spending has changed over time, and compare actual charges with contracted rates or market benchmarks. Look for differences and identify the biggest cost drivers and potential savings opportunities.
5. Prioritize Actions and Track Results
Based on your analysis, prioritize the opportunities with the strongest financial impact. That might mean consolidating shipments, negotiating carrier rates, or shifting volume to better-performing carriers. After you make changes, monitor ongoing shipment activity and costs.
Where Freight Spend Moves After the Rate Is Set
Much of what a spend analysis uncovers happens after the rate is agreed. The rate sets a baseline, and execution decides the final number. Some patterns that account for much of the drift include:
- Detention charges caused by dock delays and missed appointments
- Rejected tenders that push loads into the spot market at a premium
- Mode upgrades after a missed cutoff
- Accessorials that weren’t planned for or flagged before the invoice arrived
These issues rarely stand out on a single load, but across volume, they compound.
How Often Should You Run a Freight Spend Analysis?
Try to run a full analysis at least once a year, ideally ahead of your annual RFP or contract renewals so the findings inform which lanes you bid and how. Between full reviews, check your top lanes monthly or quarterly on four numbers: total spend, accessorial share, spot share, and planned-versus-invoiced variance. Run an off-cycle review after a network change, such as a new distribution center, a new major customer, or a shift in mode, and whenever the freight market moves sharply.
What Gets Measured Gets Optimized
Freight performance improves when teams stop guessing and start acting on real data. With ShipperGuide TMS, benchmarking and analysis become part of daily decision making.
Frequently Asked Questions
What Is Freight Spend Analysis and How Does It Reduce Transportation Costs?
Freight spend analysis examines shipping costs across lanes, carriers, and execution events to identify where spend diverges from expectations. By uncovering patterns behind accessorials, delays, and routing decisions, it enables targeted adjustments that reduce waste and improve overall transportation cost control.
What Is the Difference Between Rate Benchmarking and Performance Benchmarking in Freight?
Rate benchmarking compares what you pay against current market pricing for similar lanes, while performance benchmarking looks at how shipments actually move. Performance benchmarking covers service reliability and execution outcomes, which is how teams see where operational gaps increase costs beyond the rate itself.
Which KPIs Explain Why Freight Spend Moves?
The KPIs worth tracking are the ones that connect to a cost: tender acceptance rate, dwell time at pickup and delivery, on-time variance, accessorial cost per load, and cost per mile by lane. Each one points at a specific reason the invoice came in above the rate. A metric that cannot be traced to a charge or a decision belongs on a dashboard, not in a cost review.