By Peter Brown, president & CEO of Yellow Global
The cry is heard echoing up and down the halls of every shipping department—reduce transportation costs. The latest method supposedly to shrink transport costs is the use of B2B Internet methods. Companies have sprung up to act as middlemen between shippers, forwarders and airlines to handle cargo shipments. Implicit in these new techniques is a story freight forwarders unfortunately are familiar with—lower rates. While a great deal of techno-babble surrounds these new B2B methods, the underlying message is quite clear—the lowest forwarder bid wins the business.
Where is the concept of service in this new equation?
Admittedly, transportation today is a very complicated business. When I began my career in air freight about thirty years ago, moving cargo was a relatively straightforward process of getting the freight from Point A to Point B in a fast, efficient manner with no damage or pilferage.
Today, simplicity has given way to complexity. Pure air? Pure surface? A combination of plane and truck? Overnight or time definite delivery? Airport to airport, or door to door? Coordinating delivery time to the split second to meet production and distribution needs?
Call the airline direct. Or contact an integrator or “traditional” forwarder. The permutations seem endless.
Our business is in a constant flux. Shippers are restless. Forwarders are fearful. Shippers will think nothing of tearing up an agreement if even the tiniest footnotes are not scrupulously met.
Logistics managers are seduced by that siren call of lower traffic costs with no lessening of service. Is this modern siren call, like its mythological namesake, a song of potential disaster?
Let’s examine realistically the current role of the forwarder and his customer.
Forwarders who are content to play the role of simply being a “nuts and bolts” dispatcher of cargo, will lose out.
Forwarders who become genuine partners to their customers while offering multiple services, will win out.
Forwarders who take up the domestic challenge of assuming total control of his customer’s cargo, and correlating delivery of that freight to the shipper’s own production and distribution cycles, will retain the business.
The role of the traffic department also is changing.
Not too long ago, traffic departments were considered strictly cost items on company books. The smart traffic or logistics manager is changing that perception. His wise choice of transport will provide marketing support that will increase sales. Logistics managers increasingly are demonstrating to the financial people down the hall that moving company goods, properly used as a marketing tool, can be turned into a profit center.
Let me suggest to the logistics manager a few steps that can go a long way in combining fair rates with a high level of service.
? Don’t be afraid to form long term commitments with your forwarder. Multi-year arrangements seem to work well in Europe and Asia. A long term relationship permits both forwarder and shipper to become partners in the best sense of the word. We grow more and more knowledgeable about each other’s corporate lifestyle and culture. The forwarder acquires a genuine expertise about his customer’s operations. He can act quickly and decisively if problems suddenly arise.
From the forwarder’s perspective, we must never take the long term customer for granted. Quite the opposite. Just when we feel we have eased into a comfortable groove serving the customer, that is the time when we must make every effort to improve service, to respond rapidly and effectively to the often changing requirements of the shipper.
? The maintenance of strong service levels does not rest with the forwarder alone. There is another player in the wings. The common carriers. We must strive to maintain our sense of balance with the airlines—work with them, cooperate with them but always remember that we are independent. We have to capture attractive airline rates yet be sufficiently