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HowYield

Management

drives net revenue and profits to

meet the target of

NextLeap

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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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• Revenue Improvements

• Cost Reductions

These apply to both air and ocean forwarding (exports and imports)

Yield Management Opportunities

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• 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.

Revenue: Assessorial & Cartage

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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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In Freight Forwarding, managing yield has the greatest impact on branch profitability.

Take urgent action today!

Act Today to Improve Yield