Subscribe to our free, weekly email newsletter!



Have logistics leaders lost “pricing” battle?

The study reveals that “logistics companies are often the source of their own misery.”
By Patrick Burnson, Executive Editor
May 20, 2013

According to a new study conducted by the global strategy and marketing consultancy Simon-Kucher & Partners, price pressure is higher in the logistics industry than in other sectors – no matter the country. 

Simon-Kucher’s Global Pricing Study stated that only a “strong positioning and committed leadership” can help companies in Europe, Asia, the Americas and the rest of the world to counter the pressure.

The Global Pricing Study 2012 was based on questions posed to 151 respondents from the transportation and logistics sectors throughout Europe, Asia, Northern and Southern America. The consultancy is based in Bonn, Germany.

Dr. Philipp Biermann, a partner with the consultancy, said that the study reveals that “logistics companies are often the source of their own misery.”

“Three-fourths of logistics companies are unable to get the prices they deserve for their services,” he said. “The causes are the price-aggressive competitive environment and the prevalence of standardized products.”

Biermann noted that successful companies, regardless of industry, have “pricing power” – the ability to charge prices that reflect the value of their products and services.

“Still, its importance in the logistics sector, where margins are considerably lower compared to other sectors, should not be underestimated,” he said.

Logistics companies with strong pricing power achieve on average 17 percent higher margins than their competitors, said Biermann. “A strong market positioning and selling premium products greatly improve a company’s pricing power – which also guarantees international business success,” he added.

So where’s the problem? Company leaders need to step up and provide fresh impetus, the study shows. With stronger management involvement and a specialized pricing organization, the findings reveal, a company has the best chance to truly raise prices and achieve sustainable profits.

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

When an industry is changing rapidly, companies must adapt in order to survive. In this whitepaper, a global publisher was seeking a partner that could mitigate risk and build a platform flexible enough for their shifting customer expectations. The solution enabled the company to rewrite their operations game plan and transform their supply chain.

Global trade management technology provider Amber Road (formerly known as Management Dynamics) said this week it has acquired ecVision, a cloud-based provider of global sourcing and collaborative supply chain solutions.

While it is already reaping myriad benefits from ORION (On-Road Integrated Optimization and Navigation), a proprietary routing platform for its drivers rolled out in late 2013, transportation and logistics bellwether UPS announced big plans for the technology this week.

Diesel prices continued their recent stretch of gains with a 3.6 cent increase this week to $2.936 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

TSA has reaffirmed its March 9 general rate increase (GRI) of $600 per 40-foot container (FEU) for all shipments, and lines have also filed a previously announced April 9 GRI in the same amount.

Article Topics

Blogs · Global · Logistics · Transportation · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA