Who's measuring up?

Which carriers consistently meet or exceed expectations? Our survey of 3,300 plus readers offers answers to that question.

By Jim Thomas -- Logistics Management, 8/1/1999

"How'm I doing?"" Ed Koch was fond of asking constituents when he was mayor of New York. It was a quick way for him to gauge public perception of mayoral performance.

For each of the last 16 years, the Quest for Quality survey has in essence asked the same question for the freight transportation industry. In response, our readers have provided their own ratings of carrier performance. The result is our annual milestone report on just how well logistics providers are satisfying customer expectations.

This year, 3,305 readers responded to our Quest for Quality surveys, ranking the carriers they used in five performance areas critical to logistics excellence: on-time performance, value, information technology, customer service, and equipment and operations (see accompanying sidebar). Those readers gave 76 logistics and transportation vendors above-average ratings. Those 76 providers made our Readers' Choice list of Quest for Quality winners for 1999.

A Case for Partnerships

In addition to rating carriers in general, Quest for Quality survey participants rated their core vendors, those vendors with which they have forged a partnership, or contractual, relationship. In this way, we can analyze the scores in an attempt to find out whether shippers experience higher or lower levels of satisfaction when they enter into contractual relationships with their vendors.

For the results, see the table (at right) titled "Satisfied to the Core?," which lists the mode-specific categories, overall satisfaction ratings, and core satisfaction ratings (the scores shippers gave to those carriers with which they have formed a partnership).

The premise is that shippers enter into partnerships to improve the performance of their transportation/logistics programs, and in all cases except ocean carriage, shippers have achieved this goal. For example, the average overall customer satisfaction rating for national less-than-truckload carriers (the first category on the chart) is 31.63. The average overall core score is 36.46. Higher scores indicate higher levels of satisfaction.

The scores in the chart suggest that, with the exception of ocean carriers, shippers can improve their satisfaction with vendors if they enter into partnership agreements. It is interesting to note that the highest average core satisfaction score was earned by a category that received only average overall scores (Northeast LTL), so there is little correlation between overall and core scores.

These averages may indicate a possible course of action. To achieve the greatest bang for their buck, shippers may want to consider first forming partnerships with vendors in modes where the highest disparity exists between overall scores and core scores. Freight forwarders fit into this category, as do most of the LTL carriers.

What Happened to Ocean Carriers?

Although ocean carriers received lower core scores than overall scores, many industry observers expect this to change. The Quest for Quality survey participants completed their survey forms before the enactment of the Ocean Shipping Reform Act (OSRA), which deregulated ocean shipping rates and allowed for confidential contracts between the container lines and their customers. In the pre-OSRA market, the ocean carriers had little incentive to provide superior service because both service and rates were regulated.

Donald F. Cameron, a trade relations consultant to Bose Corp. and a marketing consultant for FastShip Atlantic, explains that ocean carriers "historically worried about costs so service suffered." He expects this to change under OSRA. "To compete, carriers will need to differentiate their services," he says. "So a given carrier may become the low-cost provider or decide to offer specialized services. For example, a carrier may sail from New York to Antwerp in seven days and identify this as a premium service."

Once service takes a priority, say a number of shippers, ocean carriers will succeed or fail based on how well they serve their customers, which is the litmus test for vendors in most other modes of transportation. Shippers and carriers alike say that is a good thing.

How We Keep Score

The Quest for Quality scores appearing throughout this feature are weighted scores that measure customer satisfaction in various areas of performance. In the simplest terms, higher scores mean higher levels of customer satisfaction. A more detailed explanation of the rating system follows. It applies to all categories except third-party logistics, for which a different scoring system was used.

Logistics asks selected readers to rate carrier performance in five areas:

- On-time performance. On-time pickup and delivery, consistent and dependable schedules and transit times, and equipment availability;

- Value. Competitive rates, pricing commensurate with service levels, and simplified pricing;

- Information technology. Tracing and tracking, electronic data interchange, and Internet and electronic business capabilities;

- Customer service. Prompt claims settlement, ability to trace and expedite shipments, problem resolution, and courtesy;

- Equipment and operations. Availability of equipment, condition of equipment, safety record, and incidence of loss and damage.

Respondents rank the importance of these attributes on a five-point scale, with five being the most important. Because these scores will differ from mode to mode, mode-specific averages were developed. (See table titled "Ranking the Performance Attributes' Importance by Mode" appearing on this page.)

Survey participants also judged their vendors' performance in each of the five areas listed above, rating them on a scale from one to three (1 = poor, 2 = average, 3 = outstanding). These scores were averaged for each mode and for each carrier. The weighted score is the product of the average importance rating multiplied by the average performance score.

The weighted scores for each vendor are then totaled, and an average weighted score for each mode is calculated. Vendors receive the "Readers' Choice" designation when their total score meets or surpasses the average total weighted score for their mode.

Ranking the Performance Attributes' Importance by Mode

On-Time Information Customer Equipment

Carrier Type Performance Value Technology Service & Operations

Air-Service Providers 4.7 3.6 1.9 3.1 1.7

Bulk Motor Carriers 4.6 3.4 1.4 2.6 3.0

Dry-Freight/Industrial Haulers 4.6 3.7 1.5 2.7 2.5

Freight Forwarders 4.5 3.4 1.9 3.4 1.8

\HHG/High-Value Goods Carriers 4.7 3.2 1.4 3.2 2.4

Ocean Carriers 4.4 3.8 1.6 2.7 2.5

Rail/Intermodal Service Providers 4.6 3.6 1.7 2.7 2.5

National/Multiregional LTL Carriers 4.7 3.7 1.8 3.0 1.8

Western LTL Carriers 4.7 3.7 1.8 3.1 1.7

South/South Central LTL Carriers 4.7 3.7 1.8 2.9 1.8

Northeastern LTL Carriers 4.7 3.6 1.8 3.1 1.8

Midwest/North Central LTL Carriers 4.6 3.6 1.8 3.1 1.9

Satisfied to the Core?

% of Shippers Overall Core

Using Satisfaction Satisfaction

Mode Core Carriers Score Score

National LTL 85 31.63 36.46

Air Express 84 34.40 37.94

Surface Package 69 33.67 36.10

Ocean 68 32.23 32.03

LTL (Northeast) 61 33.64 38.89

TL-Household Goods 59 33.86 38.14

Intermodal Service Providers 58 31.95 32.29

TL-Bulk 55 32.68 36.60

LTL (South/South Central) 55 33.19 38.17

LTL (West) 54 31.77 37.43

LTL (Midwest/North Central) 52 33.36 38.11

Intermodal Marketing 48 32.36 37.18

Freight Forwarders 43 31.62 37.09

Interregional & Multiregional LTL 40 31.10 36.33

TL-Industrial/Heavy Haul 33 34.15 37.61

TL-Dry Freight 32 32.69 35.12

Airlines 32 32.67 35.60

More About the Quest

Logistics mailed Quest for Quality questionnaires to readers who are qualified buyers of transportation services. Eleven separate questionnaires, each representing a different mode of transportation, were sent to buyers who purchased that particular service. The completed questionnaires then were tabulated using the scoring system explained in the sidebar titled "How We Keep Score," which appears on the opposite page.

Full reports showing the scores for all carriers are available from Logistics. There are six reports (LTL, truckload, rail/intermodal, air, ocean, and 3PL) and each is available for $99. A combined report, showing the results of all six categories, is available for $550. Each report also includes a detailed description of the scoring methodology.

For more information or to order a report, contact Diane Legradi via phone (610) 964-4310 or e-mail dlegradi@cahners.com.