Who gets booking when rate is the same?

Who gets booking when rate is the same?       Your balanced and comprehensive feature, 'Who's making money?' (July American Shipper, pages 40-51), while gloomy for 2009 projects a 5.9 percent growth for 2010. I can only hope the green shoots you see grow because if not new deliveries will further depress 2010 shipping line operating profit.
      A shipping line with a strategic plan of holding on by the fingernails until growth (hopefully) resumes in 2010, cutting every cost, pricing into volume cargo, counting on cash flow to pay the bills, is playing Russian roulette with its future viability. If the 2010 volume rebound does not happen, the shipping line is left with an organization without the depth needed to manage severe stress plus freight lists of marginal, at best, cargo. Raising freight rates in a diminishing or stagnant market is extremely difficult.
      Container carriers that maintain relative strength in down markets and prosper sooner as markets rebound have the human skills in place to be the customer's clear choice when the freight rate is similar. They know how to maintain customer relationships during down markets to assure they are 'on board' when markets begin to rebound.
      A container carrier can have the very best ships, terminals and other expensive physical assets, but they won't yield to potential without two intertwined 'assets' necessary for long-term success and differentiation from their competitor ' integrity of reputation and employee relationships with the customer.
      During down markets cost-cutting, headcount reduction is easy and makes management look 'smart' for a little while because it boosts the bottom line quickly and perhaps for a few more quarters. However, the risk is losing the line's differentiation.
      Customer service centers can take over routine functions done by local offices and adequately serve customers, big and small, at a low cost per call. But when a problem occurs, the customer wants a known, responsive personal link inside. Otherwise that customer may vote with his feet.
      If you are contemplating 'rightsizing' to focus on maintaining relationships with 'elite' customers, don't forget that this customer with 10,000 containers will convince you to offer a lower rate than the 'non-elite' customer and its 1,000 containers. Also remember the most profitable and resilient cargo mix plan is to carry as many 'non-elite,' higher margin, customers as you can charm onto your ships rather than adding enough larger 'elite' customers to achieve load factor.
      When economics tempt you to stop fussing with smaller 'non-elite' customers, remember that every 'elite' customer started out as a non-elite customer and succeeded. Give them a ragged relationship when they are small, and it's unlikely they will be around for you to stroke with velvet gloves when they grow large.
      Creating a human link with the customer ought to be your organization's total focus. Cashier, documentation, equipment, terminal personnel play an equal or greater role than sales personnel. Your strategy should be that almost anyone in your organization may become a link with the customer. If you create an environment that encourages these links and the value that results for your organization, you'll be the customer's clear choice when the competitor's price is similar. As the market begins to climb, customers will already be on your ships, and you will grow with their business.

Peter Spiller
president, Florida Shipowners Group Inc.,
Fort Lauderdale, Fla.