Home' MHD Supply Chain Solutions : MHD Spt-Oct 2015 Contents HOW SMALLER TRANSPORT COMPANIES CAN GROW FROM COLLABORATION
RATHER THAN SHRINK BY COMPETITION.
All around the world, the very small
and the very large transporters and
warehouse operators are surviving
(maybe thriving), but the mid-level is being
squeezed at both ends. While small businesses
can create personalised, niche services and the
large ones have size and network capacity on
their side, the middle can't seem to scale up to
keep up, and it's too costly to scale down.
Unlike a transaction-based business such
as freight forwarding, transporters have huge
capital costs tied up in depots and trucks that
are often impassable barriers to profitable
growth. But there is an alternative to expand
without expensive investments: build solid
relationships with collaborators to gain the
growth and profitability you need.
When small and mid-level operators in
each domestic market start collaborating, they
can compete with the larger conglomerates.
Working together to build a virtual, integrated
supply chain network brings you the potential to
scale from a state-based operation to national
coverage. Even a local carrier could build the
capacity to link to major capitals. This kind of
collaborative scaling can be done in a variety of
ways, both formal and informal.
Small to mid-size international freight
forwarders have been doing it for years. They
figured out they can't cover the entire world after
all, so they link with agent networks to complete
their supply chain. In Europe -- because of the
complexities of moving across multiple countries
-- networks of smaller operators have flourished.
The concept is just starting to take hold in the
Asia-Pacific region, the US, and Canada.
The advantages of being in small to mid-size
collaboration are that you retain your niche
brand wherever it works for you, and you
pick up delivery runs when cooperative peer
operators weave together a complete service
network. You not only raise your profile, you
take on more jobs without having to invest in
larger fleets or operational infrastructure. In
fact, you maximise the use of your current
Because we're talking collaborative setups
rather than mergers, you gain all the positives
without invading the commercially sensitive
areas of your business, and you keep your own
identity, autonomy, and P&L.
Change your mindset:
collaborating with 'competitors'
Rather than seeing your 'competitors' as
enemies, try identifying what it is about their
services that is compelling. Start the conversation
with operators that share your standards and
value, but compete on different routes. Then
simply extend the offer for freight sharing.
Once you have a 4PL network built on
excellent personalised service, each individ-
ual company will do better work, offer better
options, and earn better results for end custom-
ers. See the benefits of securing the customer
between you rather than having a 'win-some-
lose-some' perspective. When you expand the
services you offer every client, they'll be happier
and you'll earn greater prospects for referrals.
The number of trucks that drive around
empty and cut the profit margin from a delivery
is disappointing. An empty truck is dead
money moving. A local driver turns away a lot
of work because he won't risk an out-of-region
delivery that may mean an empty return, but
cooperation gives him the flexibility to find
backhaul or a city-based business to collect the
job at the half way point. Backloading is often
viewed as an exceptional win, but it can become
the planned completion of every run. When your
availability is posted via your network, you'll find
that the operators you once saw as 'competitors'
are suddenly filling your truck for you.
Make it possible with technology
With today's subscription-based technology
platforms, you can affordably build the public
face of a virtual cooperative. Whether it's just
you and the region next door, or you partner
with enough businesses to cover your country,
the ultimate size of your operation is up to
you. The more your network aligns itself on a
common, cloud-based application suite, the
more your minimal capital input will lead to
maximised potential gains.
You'll be in a better position if it's you who
initiates the idea of a cooperative, you who sets
the agenda, because then it will work best for
your business. Seek partners with experience
-- people with fourth party logistics expertise
-- to join your network planning. Plenty of
cooperatives have found success before. If you
follow their lead, you won't have to reinvent the
wheel to get the operation rolling.
A shared software platform supplies
the essential track and trace, automatic
notifications, reciprocal invoices, automatic
milestone updates, and mobility that small and
mid-size operators need to scale up, keep up,
and thrive. When you work better together,
Mark Connell is the senior logistics architect
with WiseTech Global. For more information
MHD SUPPLY CHAIN SOLUTIONS --- SEPTEMBER / OCTOBER 2015
SCALE, AND SUCCEED
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