Have logistics leaders lost “pricing” battle?

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.