FUM (Freight Under Management): What Does it Mean?

Representing a Philadelphia area company, a Schooly D/PSK reference seemed appropriate. The reality is it means lots of things, depending on who says it and what they are trying to sell. Is a bigger number better? Is it applicable to the problems you’re trying to address? As a shipper, it is often confusing to unwrap the layers/definitions of FUM and why any given definition should matter.

At its core, FUM represents client logistics spend on platform. Providers can say “We work with x number of companies, and those companies spend XX dollars on freight”. What gets confusing is HOW is that provider works with those clients on that freight spend, from a both a delivered value proposition and revenue standpoint. For instance, I’ve seen providers throw out “20B in FUM” figures. This could mean they have 20B of spend they execute as a freight broker, or 15B they execute in brokerage and 5B of freight moving through their warehouses, or 10B in brokerage, 5 moving through facilites/warehousing, 3B drayage and 2B in transportation management.

What does that mean? Maybe nothing, maybe a lot. The question a shipper must ask is “how is this relevant?” For instance, if 20B is the revenue of a provider’s brokerage, but you’re looking for agnostic 4PL services the provider may offer ZERO expertise. If you’re looking for someone to execute as the carrier of record, it may mean a lot. For 3pl/brokerage, I’d wonder does the provider have similar clients in like verticals, or managed across like geographic areas. If looking for a 4PL provider, I’d want to know the answer to those questions, but also does the provider have a focus on continuous improvement and helping shippers better manage their FUM vs. trying to infiltrate and supplant it (or in a positive light strengthen and broaden it). The question becomes what is the providers goal in getting your FUM, what are their incentives, and how do they price it. Transportation Management fee/subscriptions are different than capacity is different than brokerage revenue. As a shipper: MAKE SURE YOU UNDERSTAND THIS.

If you have further questions about FUM, how providers position their services to drive revenue, and what options exist in the marketplace, shoot me an email at tyler.white@nfiindustries.com or tjw@strategyenabled.com.