In hard economic times, it is remarkable how management at companies of every size, type and description declare their businesses are “getting back to basics.” Not only do they assert their people are concentrating on the nuts and bolts of running a business, they are demanding vendors follow their example. As the smooth, efficient transportation of their product lines is a key ingredient in the success or failure of their selling efforts, with resultant profit or loss on their balance sheets, logistics providers are caught right in their crosshairs.
What are the basics of transportation today, whether by air, ocean, truck or rail? What do customers want from their vendors?
The principal items on customers' wish lists include competitive pricing; delivery of goods on time and when promised; rapid, accurate transmission of information from vendor to customer and hassle-free transshipment of merchandise from pick-up on the loading dock to delivery at final destination.
The mark of a successful forwarder remains the same in good times and bad: it is to offer the shipper a compelling blend of personal service combined with high technology. As economic conditions change, however, priorities must be modified to reflect these changes.
Of course, it is the successful freight forwarder who responds to the current needs of the shipper. To offer the customer the kinds of services required. In today's economic climate, however, technological hijinx become less important than the primary purpose of moving goods in a swift, expeditious manner.
In a softer economic climate, no one is safe. The very large international forwarders, who disdained small shippers' business in the past, now compete vigorously for it. National trucking firms who traditionally have emphasized full load shipments now fight for less than truckload (LTL) business against smaller, regional carriers. The package express companies, who once scorned any shipments less profitable than overnight deliveries of high value packages and documents by air, now eagerly accept low value, slower ground freight of any weight and type.
In a harsher economic climate, we forwarders require a change in mindset. We need more shoe leather and less preoccupation with the Internet. More sales calls and less time looking at computer screens. Our business is people, not computers. Never has there been a better time than today to emphasize that truism to our customers.
In these currently tough times, despite our best efforts, some attrition in business among existing customers will occur. Success or failure in capturing new business may well mean the difference between a viable company and a barely breathing one. Even in good times, our industry has not been particularly successful in attracting customers who either don't use air at all or use it sparingly. We have been too preoccupied with soliciting business from each other rather than attracting new shippers to air. We seem content to generate only a 2% share of all domestic freight and 4% of international cargo. These percentages have not changed in thirty years.
As an industry, we must do nothing less than create a sales and marketing environment that will cause shippers to think of air not primarily as a premium method of moving goods but as a powerful sales and marketing tool. In these troubled times, we require a persuasive and compelling rationalization for the use of air. The last genuine effort to provide an economic underpinning for the utilization of air was the Total Cost Concept. That was almost forty years ago. We require persuasive reasons for the 21st Century, not the 20th.
In a fiercely competitive environment, the first instinct is to cut rates. Suppress that instinct. Bargain basement rates, often below the cost of doing business, are at best a temporary fix and at worst the start of a slide down a slippery slope to bankruptcy.
Rather than cutting rates to the bone, become a partner to your customer's profit-making process. Don't be just another anonymous vendor. Show your concern for his bottom line and how you can help in making it stronger. That may call for knowing his business as well as your own. Never take his business for granted. When he calls or e-mails with a particular problem, answer the request promptly.
Forwarders must respond to the economic realities of today. Those companies who do so will remain successful. Those who do not, whether in business ten months or ten decades, will not survive.
Coppersmith is president of the US division of Mainfreight, formerly Target Logistic Services, and a 36-year veteran of the logistics and freight forwarding industry.