Here's Why Logistics Pros are Losing

I recently read a study published by EFT.com that the number one threat to business growth amongst logistics service providers (LSPs) in 2016 was competition stealing away business. Meanwhile the number one way these same LSPs were planning to gain new business was by pulling clients from their competitors. While this isn’t earth shattering news as to how companies gain and lose business, I see this as an indication of where our priorities are in logistics.

Despite popular belief, companies rarely turn away from a great service provider for a lower price. What this tells me is not that shippers have become greedy in trying to leverage one LSP against another in an effort to pay less and less but rather that LSPs are not providing relationship building service at a level that their shippers are compelled to turn away their competitors. 

While some may argue that a stagnant economy pushes any service provider to encroach on claimed territory, I believe there is more to the story. I have said and I continue to say that service (not just customer service) is dying in America. Perhaps the introduction of new cost reducing technologies in the marketplace or the supply vs. capacity flip has caused LSPs to dig to the bottom of the barrel to compete on costs while shelving service. Whatever the cause, there is no upside to businesses when service is not valued above all things.

To be clear, I’m thoroughly in the camp of thinking that best market pricing is absolutely critical. In fact, Go By Truck was the first technology product built for this purpose. I however know that “how” this is done means everything, but I digress.

I would encourage all LSPs to take a step back from the pricing war and look at the big picture. Every relationship of your own is likely based on something you provide one another which has nothing to do with anything monetary. Your customers are no different.

Service can still be achieved through technology; we simply must be cautious in the technologies we choose. There is egregious monetary waste and deception going on due to third party interaction in freight transactions but this doesn’t give us a license to turn LSPs into robots. I can’t stress enough how critical that THE RIGHT technology preserving both best pricing and service is at this time.

In this same survey, LSPs were shown to “most often come up short in the areas of innovation, new ideas and solutions (according to customers).”

We here at Go By Truck understand first-hand the shortage of both technology creation and utilization in logistics. As an example, our “roll-out schedule” to introduce additional pieces of technology to the industry after our initial launch has been slowed by over eighteen months. This means, we literally have technology sitting on a shelf waiting for the industry to be ready.

This study as well as others only served to validate what we knew several years ago awaiting the right moment when the industry would be ready to adopt technology that solves both service and cost issues. Deciding to unveil our second release this upcoming February 2017 became an easy decision once taking a look at current market indicators and having a healthy track record of client feedback. We can say with confidence that the decision companies are currently having to make between service and price will soon be a thing of the past.

The “new factor” with any person, company or technology only lasts so long. There has to be real “meat” behind it to get staying power. I would encourage LSPs to focus less on running after another’s customers and focus rather on providing superior service to the ones you already have. A war of superior service over how low we can beat down a carrier is something I for one would be thrilled to participate in and would forever change the logistics environment.

As we all know, logistics is one of the last industries largely based on relationships and very little on technology. As we walk down this path of change together, lets challenge ourselves to create technology that retains the human relationship and turn logistics from the last to adopt to the one to watch.