If there is one thing we have all learned during the last credit crunch, it is to spend only when necessary and to repair what is broken rather than buying new. In business, though, it is a matter of not spending on over-complicated products, over-long contracts or over-priced services.
Why bigger may not be better
In the freight forwarding and 3PL industry however, the big brand names still rule the roost. Despite observing the lessons of the wider economic situation, those responsible for procuring freight forwarding and logistics services still seem to believe that big brand name equals a better freight forwarding and contract logistics service. The exact opposite may just be the reality. Shippers or buyers of logistics services often find themselves locked in to one supplier for everything, having been persuaded that it’s the best decision to buy the contract logistics service where they bought the air freight service – even though, it could argued, that you wouldn’t buy your vehicle insurance at the same place you booked your holiday.
To be fair, it isn’t always the buyer’s fault. The big brand name companies have huge marketing budgets to spend, persuading companies that they are a safe choice. The old adage that you’ll never get sacked for using a well-known brand is not always true. Big brand name 3PL providers have been able to scare buyers into thinking that a niche freight forwarding or 3PL provider would be more risky, be less trustworthy and have IT systems that are less likely to be compatible with existing systems.
The big brand name freight forwarding companies and 3PL providers seem to be pulling the wool over buyers’ eyes with the four following beliefs:
- Larger companies provide better service
- Bigger companies are more flexible
- Company size equals savings
- Big, complex systems equals better systems
Let’s look at these points.
1. Larger companies provide better service
Large companies do in fact have more employees. Does this mean you will get better, dedicated teams servicing you? In reality, with smaller freight forwarding companies or 3PL suppliers, shippers are actually likely to get better service level agreements, because every customer matters, and represents a bigger proportion of their income. Service will also be more personal, attentive and responsive – which is what most people consider a ‘superior service’.
2. Bigger companies are more flexible
The biggest myth is that a provider will “tailor” make a solution. Any idea or customised solution that is required must go up the bureaucratic ladder to finally reach a dead end. No, the fact is that the buyer has to fit into the large forwarder and not vice versa.
3. Company size equals savings
In reality, after a lot of research on ocean freight forwarding products, the difference in price between a large versus medium or small forwarder is usually not there. From personal experience, when working at big brand freight forwarding companies, I’ve found it often difficult to compete with small providers. Their price can be better due to lower overheads and because each customer truly represents their livelihood. And more often than not, the smaller forwarder has a far superior sense of customer service as they truly value the customer.
4. Big, complex systems equals better systems
Big brand freight forwarding companies and 3PL providers often “hide” behind “end-to-end” IT solutions. It is unlikely that a large freight forwarder or 3PL’s vast product range has come from years of dedicated research and development. Often, big 3PLs will buy companies to fill holes in the current IT tool sets so they can offer everything to everyone.
But when it comes to actually using the various systems and software, customers often find that not only are the various elements not intuitively interactive, but that they are faced with using multiple interfaces to access each part. Technology modules from the same vendor don’t always complement each other. Freight and logistics decision makers can find that instead of buying into an ‘end-to-end’ approach, they have received some old-fashioned building blocks covered by a lot of sticking plasters or Band-Aid’s.
Bigger is not always better
Choosing a small, flexible freight forwarding company or 3PL provider over a cumbersome, expensive giant vendor may not be the right choice for everyone. But for many companies it is the better choice. You may realise true improvements, true integration and a true supplier partnership which adds value into your supply chain.
We may be powerless over the economy and other macro influences, but when choosing your suppliers, it pays to understand what the actual differences are and whether, in these tumultuous economic times, these differences will actually affect the pocketbooks in the way they should.
What have you found when sourcing freight forwarding companies and 3PL providers? What differences have you discovered?
For more than a century, 3PL and Freight forwarding service provider, BCR has continued to help small, medium and large businesses achieve an optimum logistics solution with warehousing and transportation, including air freight and sea freight services to and from the major ports including Brisbane, Sydney, Melbourne, Adelaide and Fremantle (Perth).