Too often, in the course of an intervention by MyTLA, Shippers (importers, exporters, distributors, manufacturers) are overly concerned with the transactional costs offered by the Service Provider (carriers, brokers, forwarders, 3PL’s, etc.) and have not spent sufficient energy in selecting the right logistics partner, first and foremost. At the same time, too many Service Providers try to grow market share by lowering their fees rather than developing profitable partnerships with a perfectly fit Shipper.
When you focus on finding the right partner first, you will find that service costs for comparable value are negotiable to market rate or better. That’s because the right service provider has an understanding of your company and your industry. They have other customers just like you: in the same vertical market, sourcing from and selling to the same countries, requiring similar equipment and routings. They have buying power in your trade lanes and can share greater discounts with your company. These service providers have hired employees and invested in systems and technology to service their other customers that have many of the same challenges and opportunities as you. Your perfect service provider is easy to work with because they are not too big and not too small. They offer value-added, web –based technology but you can always get a trusted, knowledgeable advisor on the phone when you need one.
In turn, the perfect Shipper allows the Service Provider to capitalize on existing resources, replicate processes and reduce operational costs.
This re-alignment based on fit rather than cost results in a more long-term, harmonious and profitable engagement for both Shippers and Service Providers alike.
I’m not saying cost is unimportant or even secondary. If your company ships wood chips from Montreal to Cornwall, shipping costs might well be the one and only criteria for selecting the right trucking company. However, if your company imports dutiable electronic components from China for assembly in Canada and distribution throughout North America, then somewhere, out there, is a 3PL that already has a customer like you and they are familiar with the security and customs regulations of your product, the sensitivity to damages or late delivery and on top of all that, you get along with their people and resolve service and credit issues in a timely and amicable fashion.
Ultimately, under these conditions, not only do costs naturally gravitate to a fair market price, but unintended costs, service failures, customs fines, penalties and other such risks are mitigated, making the overall partnership even more profitable for both Shipper and Service Provider; a competitive advantage rather than a necessary evil.
So by all means, make sure you negotiate the best possible price, but don’t forget to find the right partner that will allow your company to control costs, mitigate risk and to create a competitive advantage for your company.
Stay tuned to this blog and we will show you how..