Retaliers and carriers diverge on service/cost prioritisation
A curious discrepancy was highlighted by Alan Jones, the former MD or TNT Express who now chairs Metapack. Apparently, 70% of retailers say they put service first when looking for a parcel service, yet 90% of carriers say retailers put cost first.
Brian Templar, chairman of consultant Davies & Robson Logistics, confirmed that price came fifth or sixth in the list of why shippers changed their carrier.
Whatever the truth, there is no arguing that prices have shrunk. Paul Murray, non-executive director of Target Express, said that during his seven years as chief executive, the retail price index went up 18.4%, both salaries and rent and rates increased more than 20% and fuel by 50%, while insurance more than doubled.
Yet next-day consignments were just 5.6% up and the price for a single parcel fell by 4% over the same period, Murray said. Customers had benifited from having such a large choice of carriers, chiefly in the areas of competitive pricing, much improved general features and IT development. But low margins, low loyalty and company failures had penalised customers, which needed trusting relationships to achieve stability and quality.
Carriers’ costs would reduce if everybody worked together to achieve first-time delivery, Jones said. But he felt there was no longer a market for a one-stop shop, and firms should specialise not generalise.
