LAC

The Ultimate Challenge: Service Vs Price when Shipping Internationally

  • By LAC Blog
  • Sunday 15, June 2014

There is not much written about the history of freight forwarding, nevertheless this activity has been around for a few decades. There are currently thousands of freight forwarders around the globe; some have excelled more than others for several reasons. The most important reasons are probably their years of existence, money invested, superior service and controlling a niche market, among others. As in any other businesses, competition is a big challenge to all freight forwarders. With new freight forwarders entering the market recently, competition has increased even more during the last years. Price has predominantly become the criteria used by most companies when selecting a freight forwarder, which makes the freight forwarder develop into a replaceable commodity. When I ask companies how important is price compared to service, the answer I get is always the same: they are both as important. But how possible is to obtain high service at a cheap price? In his book Linchpin Seth Godin writes: “Consumers are not loyal to cheap commodities. They crave the unique, the remarkable, and the human. Sure, you can always succeed for a while with the cheapest, but you earn your place in the market with humanity and leadership.” Is there a contradiction between what Seth Godin writes and real life? Probably not. I guess what Seth is trying to tell us is that our responsibility as a service provider is to change this “low price” mind set by offering unique and remarkable services. Creating value in the services we offer is what will set us apart from the competition. When we create value our “too expensive” price becomes reasonable. Customers will choose to pay the price if they get the service they need; this is how service beats price. It’s similar to why people chose to buy high end products at prestigious stores instead of buying cheap products at the flea market. When companies need to do business with a freight forwarder, they might want to ask themselves the following questions: How well does this freight forwarder know the markets that I sell too? How long has this freight forwarder being doing business with these markets? What other companies like mine has this freight forwarder been helping? What is their level of customer satisfaction? What kind of connections does this freight forwarder have in the markets that I do business with? The answers to these questions can easily help them determine the kind of choice to make and whatever their choice is, it will not only affect them but it will also affect the one at the other end of the supply chain: the final customer. Alan Greenspan, an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006, once said that “for you to gain, those you deal with should gain as well”; offering value added services make us all gain. The choice is ours.

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