The ocean carrier industry has changed dramatically over a short period of time. No, the ocean did not notice??
But many people did—particularly, the customers of ocean carriers and as a result, the customers of 3PLs.
For many years, the customer wanted to know: What’s the size of the ship? What is your transit time between point A + B? Where is my container?
During this time, the carriers were focused on lowering their operating costs (gray ships, terminals, equipment etc.) while at the same time trying to create differentiation, however, in the end — if you were cheaper, had the equipment and met the required delivery date (RDD) you got the business.
Things have changed. Now, the customer wants to know: Where’s my stuff (not just the container, but the contents of the container, (PO’s, line items, color, sizes, pieces, parts, etc.). And these questions are now being directed to the 3PLs who integrate the customer’s partners and manage the end to end process including the information, physical product flow and the associated documentation. The client continues to look to leverage best in class providers and partners who provide the information physical assets and infrastructure to support their requirements while the ocean transportation piece has been and continues to be commoditized.
The 3PL’s that can effectively answer these questions and can provide value to their customers far beyond the old transit time and price request. While the carriers continue to do whatever they can to offer more value, access to space and equipment always seems to trump value, particularly during the busy seasons throughout the year.
That said, let’s take a look at why that happened and what you can do to be in the group of service providers that continue to thrive.
Information became more important than assets and infrastructure
The Information Age has changed the transportation logistics industry in a huge way. Previously, whatever carrier had the best proprietary platform would win the business. Everyone was racing to build everything end-to-end with complementary assets and infrastructure in order to be faster and more efficient. So the carrier’s clients were forced to utilize multiple platforms to track & trace their product and still had no way to execute a plan to manage their product flow and any potential disruptions in their supply chain. The 3PL’s integrated the carriers’ information as well as the clients other trading partners and quickly became the system of choice for the large/complex BCO’s.
Now, if you can provide solutions based on information, the customers don’t care about individual carrier selling points (speed, frequency, capacity), they would rather have ready options to deploy to cope with disruptions and maximize opportunities. What you know, when you know it, how quickly you can share it with others, and most importantly, how you can create value with the information, is the new gold standard in transportation.
The need for collaboration over operational skills
This shift toward information + operations has also changed the skill set needed by the workforce of the transportation logistics industry. For a newcomer to this industry, it takes a far greater technological literacy to succeed. He has to inherently understand the value of information—how to know something, share it, and create value for his customers.
The desired skill set is no longer just operational—it has to be collaborative.
- How do you communicate with your customers?
- How do you communicate with your competitors?
- Can you take a position of neutrality and transparency with the customer to give them open, honest, integrated feedback based on data to provide valuable information to them?
The answers to the questions above aren’t simple and require data, organization, and of course, collaboration. A CRM seems like a natural fit, but for years, they were not widely adopted by the international ocean transportation community, carriers and 3PLs included.
Clearly, this has changed. Technology has allowed innovative companies to distance themselves from tactical competitors by providing value based on the ability to effectively collaborate.
Using organization at the RFQ management desk
A lot of newcomers to the 3PL side of the desk will find themselves managing RFQ’s, which can be an incredibly complex environment. The ability to deliver quality, timely, data-backed responses to RFQ’s is challenging.
The best way to achieve this is with an organizational process that has a clear structure for providing not just a response, but a story. Ideally, it includes the overall solution and the components that need to come together to make it happen—all in a manner that’s interesting and digestible for the customer.
As Peter Gruber posited, “If you can’t tell it, you can’t sell it.”
It used to be that a compelling story could only have been told by upper management, somebody with lots of experience and knows what the customer wants, how value would be perceived, and how all the parts worked together.
No easy task for a newcomer to the bid desk.
With the tools available today, this task of storytelling is easier. The ability to log successful deals, unsuccessful deals and prior experiences with partners in a CRM allows people outside of upper management to provide value input (to tell the story) into an RFP. The CRM makes this possible by providing the structure, the data, and the access to collaborate with stakeholders.
With your organizational goals and best practices in hand, it’s much easier to walk into a strategy session with a customer and match their needs to what you already have.
Instead of ending the meeting with the notorious “I’ll get back to you,” you can close with a clear understanding of predefined business rules, who owns what, what is delivered when, etc. Compose all of that in a document that you can control, update, and share as necessary. It should contain product documentation, SOPs, SLAs, KPIs, and approval processes for anyone involved in the project—both at the destination and the constituents of the customer around the world.
Having a single tool to capture your internal data is nice, but being able to collaborate and pair that up, securely, with external resources is revolutionary. This is the difference between being tactical and being driven by solution design.
Transition from reactive to proactive
What customers really want to know is: How am I performing today?
They want information in real-time, and in an intuitive format that’s easily digestible and does not take days to create. The ability to proactively deliver these types of ‘homework’ assignments from the customer real-time is the difference between a quality 3PL and the tactics-based freight forwarders of the past.
The traditional 3PL model is outdated and is in need of a makeover. 3PLs that aren’t using open, collaborative working relationships with customers (and competitors) will lose out on opportunities. The new breed of 3PL—and the customer expectation moving forward—has the ability to collaborate and to measure performance accurately.
No customer wants to wait while a 3PL does an internal huddle to come up with QBR’s and KPI’s. They want transparency and access in an open collaborative environment. Today’s client expects the KPIs, analytics (business intelligence) to be at the push of a button and is looking to their 3PL to interpret, translate and identify actionable insights along with matched against industry best practices as the path to continuous improvement and therefore, the key to long-term strategic relationships.
Bill Aldridge is currently President of Allport Cargo Services USA. During his 30-year career with ocean carriers and 3PL including one that he founded, United States Consolidation Ltd, which he sold to Exel in 2002. He’s worked with the top names in the industry like APL, Exel/DHL, including a six-year tenure in Hong Kong leading APL Logistics. Bill started in logistics after pitching for the Atlanta Braves in 1978, where he started 14 games and struck out 57 batters.