With a certain ring of Ma Bell, or Grandpa telling you how back in his day things were made with the quality of blood, sweat, and tears, Old Dominion Freight Lines has been spotlighted numerous times for “Holding the line” on pricing, and relying on their quality of service. While rumors circulated of a domestic economic downturn, coupled with accordion like freight capacity, Old Dominion chose to focus on outperforming their competitors in service quality, rather than cost aggressiveness. “By maintaining price discipline and focusing on a best in class service, which saw 99.6% of shipments arrived undamaged, Old Dominion has maintained margins at a level that continues to outperform its peers.” (Transport Thoughts)
Markets shift. Capacity tightens and expands. Profits rise and fall. Companies who separate themselves by providing best-in-class service during good economic times should trust that those same service levels will continue to allow them succeed. Filtering vendors by price is a simple and convenient decision-making strategy, but far too often businesses cut prices to remain competitive and at what cost to their quality of service? The real question that no one is asking is what is the greater impact of these cost reductions to the end user?
A reduced LTL or truckload price may help a struggling manufacturer in the interim, but what is the financial impact of that increased transit time? Or increased claim ratio? What is the impact to the integrity of that customer when their LTL carrier’s customer service is now failing them? As tides rise and fall, it’s imperative that any business who provides a superior service continue to provide that service without sacrificing margins, market share, or most importantly, quality.
This is a sales issue. A good transportation provider focuses on providing a myriad of services designed to help companies make more profit, rather than simply cut cost. A 3PL can offer what any one freight carrier cannot. For example, BlueGrace provides access to a free state-of-the-art Transportation Management System (TMS); specializes in LTL and can also provide Air Freight and Expedited Services when the need outweighs the cost. Does your low cost shipping company provide you with a free App for the iPhone so that you can run your quotes on the go? A good logistics provider analyzes customer needs and provides services to help them streamline their current processes. The ripple effect of such process improvements is exponential for a business. While everyone strives to provide the most cost aggressive rates, I’d rather be known as the most cost effective rather than the cheapest.