#03 – The Power of 1%
Cargo and freight carriers have long focused on minimizing cost to achieve profitability. Too many go down the dangerous path of cutting costs to the detriment of service reliability and shipper satisfaction. Such behavior reinforces perceptions of shipping as a commodity business without differentiation – or pricing power.
In today’s episode, host Judson Rollins points out a better path to higher margins: work to boost your unit revenue just one percent, which is more achievable and sustainable than most cost-cutting methods. As your profitability grows, you can invest in even more revenue generation strategies, driving a virtuous circle leading to long-term financial viability and success.
What You Will Learn in This Episode
- Why cost cutting is not the best means to increase profitability
- Why passenger airlines are a relevant example for cargo/freight carriers
- How to differentiate your service levels to capture more revenue from each shipper
- Why you should implement time-definite delivery options as well as deferred shipment options
- Ideas for building a portfolio of value-added optional service features
- “In today’s chaotic supply chain environment, reliability is highly valuable and will allow you to charge a premium.”
- “Start identifying new service features by conducting a ‘mystery shop’ with a couple of your forwarders.”