Margins in the shipping and logistics industries have fallen to dangerously low levels, both for carriers and shippers. As competition continues to become tighter, shippers are faced with the increasing probability that the deals they have negotiated are literally too good to be true.
So just how can we achieve a collaborative freight partnership?
What is called for is a new, more collaborative model of forming freight agreements that will improve the actual efficiency for both parties to the deal, and which may be the only way to improve the reliability of performance to former, pre-austerity levels. The traditional ‘bargaining’ posture of agreement formation will not achieve these ends. Such collaborative agreements must, and can only be built on trust, transparency, and full disclosure.
Both potential partners must be fully and accurately aware of each other’s capacity and their mutual compatibility. Both must be truly committed to the success of their joint venture, and be willing to give the other ‘the benefit of the doubt’ in order to achieve their mutual goals.
Shipper and carrier working together is whats needed
Ideally, the shipper should make the first move towards full disclosure, making the full extent of their network, their business costs, and their service objectives. As the shipper is the ‘buyer’, they have the opportunity to begin the process in full candour.
If the carrier is willing, whole heartedly, to negotiate on the same terms, both parties can work out a deal that truly optimises both of their organisations and provides the highest possible margins for both. The intention to share the benefits of the deal equally, or in another fair and balanced way, is what is really different about his process. Real collaboration is impossible if one party is trying to profit at the other’s expense.
I know I’ve already lost a great many of my readers here. ‘Screw the other guy!’ is the core of ‘business’, right? But it needn’t be, and as the pressure to chisel every erg of efficiency out of every aspect of business becomes more intense, cooperative, collaborative partnerships become one of the only reliable ways forward. The long-term gains of a successful collaboration strongly outshine the short term gains of ‘getting the better’ of the other party in a business deal in any case. The only thing needed is trust, and we just can’t afford not to look for trustworthy partners rather than ‘easy marks’ any more.