What the shipper wants
This year’s annual conference of Cargo Network Services (CNS), I the US arm of The International Air Transport Association (LATA), brought glimpses of a near-mythical species – the shipper. Airlines spend a good deal of tunic guessing what their needs are and, as often as not, it’s consultants who tell them what the shipper really wants. To remedy that, CNS put several big shippers on the spot.
The message they brought across is that shippers want more from a transportation provider than simply moving their product from A to B. “Top of our list is supply chain management. We’re not interested in buying forwarding or brokerage. We want total solutions,” said Joe De La Luz, director of distribution and trade compliance of Ericsson.
Visibility was another factor stressed by several shippers as a key criterion in selecting transportation partners. Shippers demand total visibility along the entire supply chain, which requires integration with their own IT system set-ups.
Gordon Gilstrap, director of logistics at Hewlett-Packard (HP), warned that it was not enough to understand his company’s requirements. What HP does is driven by the demands of its customers.
The company is using 50-60 dIfferent supply chain models to move its range of product. These demands imply that shippers are interested in forging long-term relationships with their logistics partners.
“We’re in it for the longhaul. We want an ongoing relationship with our logistics suppliers,” confirmed Cindy Christensen, manager of international trade operations at Edwards Lifesciences.
This would suggest that shippers are not likely to switch logistics providers on the basis of lower prices. “We have 16 criteria to evaluate carriers. Price is not even in the top eight,” said Tom Day, director of global logistics at Compaq Computer.
At HP, price is number five on the checklist, Gilstrap said. “Don’t talk price, talk cost! We’re after total cost. If you take a day out of the supply chain, we know how to facto that in,” he added.
Somehow the shippers failed to convince the audience on that issue, though. A poll indicated that 29% of the participants still thought that price was the top factor for shippers.
“Price is everything. Service is a given,” sneered one forwarder.
Moreover, shippers can and will ditch elaborate supply chains within minutes if a new location tempts them with tax benefits. “Tax advantage will outweigh any logistics advantage you can bring to us,” Gilstrap admitted.
“Our finance department loves them. Yes, there are no flights, no airports, no roads, but the tax advantages are great.”
