æReliability issue is always No. 1Æ
I read with interest the letter to the editor, 'Who gets the booking when rate is the same?' (September American Shipper, page 6, by Peter Spiller, president, Florida Shipowners Group Inc.). While I agree that personal knowledge of the individual with whom you are dealing is important, numerous market surveys over the years have revealed that there are basically five reasons why people chose carriers they do (assuming that the freight rates are relatively comparable):
' Reliability. Do exactly what you say you'll do. If you say it's a 12-day transit time, do it in 12 days. If you say 25 spaces per vessel, give 25 spaces. Shippers can plan with reliable services and that is paramount to selecting a carrier.
' Total transit time. It's nice to know your ship goes from point A to point B in five days, but my cargo moves from point X to point A, B, and Z, and in there are port/terminal delays, etc. So what is the actual total transit time from the real origin to the real destination?
' Equipment. Give me the number of clean, serviceable pieces of equipment that I need, when and where I need them.
' Customer Service. Give me access to a single point of contact where I can get all questions and problems resolved (either by phone or Internet); answers to all of my service questions quickly and correctly; and respond to and resolve all my problems quickly without repeating them.
' Documentation. Give me accurate and timely finalized documentation.
The reliability issue is always No. 1 in any market survey on 'how we chose a carrier.' The other four reasons will change in rank from time to time, but they remain the same. If you are the shipper's closest friend and have competitive rates, but have an unreliable service, you won't keep the freight for long.
At Sea-Land, I headed the centralization of customer service and documentation in the United States from 1992 to 1996 when we reduced those functions from 13 locations to Dallas. We initially took a lot of flack, especially from freight forwarders who said 'I used to be able to talk to Sally in your X office and get answers immediately. Now I call someplace in Texas and get someone who I don't know and who doesn't know me.' Over time, better service ' we went from a 5 percent error rate in documentation to less than 1 percent and got our bills of lading back to the customers in less than 24 hours 96 percent of the time ' softened those responses.
However, when Maersk Line benchmarked us and tried to centralize initially in 1997, the carrier got so much flack that it backed away from the concept for years. Now Maersk does it all from India and the error factors are terrible, but the costs are so attractive that the carrier can live with it. By the way, the Sea-Land project in the United States saved the company $21 million a year after about four years in place.
Gary Ferrulli
principal, Global Logistics & Transport Consulting LLC,
Chandler, Ariz.