Have logistics leaders lost “pricing” battle?

The study reveals that “logistics companies are often the source of their own misery.”

By ·

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

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 [email protected]

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!

Article Topics

Global · Logistics · Transportation · All Topics
Latest Whitepaper
Improving Packaging: The Cost of Shipping Air is Going Up
Retailers and manufacturers that insist on using inefficient and sloppy packaging methods—oversized boxes, inefficient packaging, poorly constructed palletized contents—are paying for their mistakes in sharply higher freight rates. Pitt Ohio White Paper, Logistics White Paper, Dimensional Packaging
Download Today!
From the July 2016 Issue
While it’s currently a shippers market, the authors of this year’s report contend that we’ve entered a “period of transition” that will usher in a realignment of capacity, lower inventories, economic growth and “moderately higher” rates. It’s time to tighten the ties that bind.
2016 State of Logistics: Third-party logistics
2016 State of Logistics: Ocean freight
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
EDITORS' PICKS
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....

Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...
Port of Oakland launches smart phone apps for harbor truckers
Innovation uses Bluetooth, GPS to measure how long drivers wait for cargo