7 steps to success in the transport industry
Posted by Bart Gadeyne on 15/04/2016
The transport industry is one of the most competitive industries. Road taxes, tenders and low-cost country competitors increase pressure on the profit margin of many West-European transport companies.
Many companies struggle to survive. However, some companies succeed at staying ahead of competition. In this post, we list the aspects that these successful transport companies have in common.
1. Added value services
Higher profit margins can be achieved by penetrating in niche markets. Some customers have specific requirements that are not covered by all transporters. Successful transport companies often offer a wide portfolio of services to meet these specific requirements. The profit margin of these niche services compensates for the lower/negative margins of the highly competitive services.
- High value product transport: additional security measures are required.
- Transport that requires specifically skilled drivers: transport of machines that need to be installed by a driver with engineering skills.
Successful companies got their data right! They understand that data gathering is essential for optimization steps, KPI reporting and business case validation.
3. Cost reduction programs
Continuous improvement is embedded in the foundations and company values of blooming transportation firms. They are continuously looking for optimization potential for their fleet and network. Dynamic teams are assigned to promising projects and are supported by top management.
Examples of promising projects:
- Collaborating with subcontractors
- Optimizing subcontractor pay schemes
- Outsourcing orders that don't fit in the strategic focus
- Implementation of Route Optimization software
- Network study: Optimal DC locations
4. Collaboration with customers
Success stories often originate from the customer-transporter interaction. An atmosphere of trust and open communication can create win-win situations. For example, if a transport company can save 1000 euros a day on logistics cost by changing the customer time window from 9-10 a.m. to 2-3 p.m., both parties can discuss this matter and find a solution that is beneficial for all parties involved.
5. Collaboration with competitors
Cooperation with other transport companies can result in win-wins. A perfect example is Teleroute. This platforms allows transport companies to exchange orders with each other, resulting in less empty kilometers.
6. Negotiation skills of sales team
The transport sector is a tough industry where negotiation skills can make or break a company. Therefore, having a first-class sales team is essential for leading transporters. A sales team that continuously sells contracts at 3% higher prices is invaluable for the company and positively impacts the profit margin. Top transporters know this and embed these negotiations skills in their organization by means of negotiation trainings and programs.
7. Brand image
Public relations are key in creating a positive brand image. Efforts to reduce the carbon footprint or to counter local unemployment lead to goodwill and better company results. Successful transporters are aware of their social responsibility and impact on the environment and the advantages that come along with a positive brand image.