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 - LM Editorial

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

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement partners Canada and Mexico in January dropped 1.2 percent to $89.3 billion.

Download our new white paper, "The ABCs of HST: Understanding the Harmonized System of Tariffs," for insights and explanations of the complex cross-border classification codes.

In today's supply chain, the only constant is change. Our white paper 'Change Your Perspective: Four Keys to Effectively Adapting to Rapid Change in the Distribution Center Environment' provides key insights on not only adapting to trends, but which trends will enable you to achieve running the warehouse of the future.

Despite great strides in mechanization and technology, many U.S. ports and terminals remain challenged by political conflicts, internecine competition, and internal communication issues.

Navis World 2015 welcomes record crowds to examine technological solutions to port congestion

Article Topics

Blogs · Global · Logistics · Transportation · All topics

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers 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. Contact Patrick Burnson

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