The 7 Qs You’re Probably Not Asking

The Questions You Don’t Ask Your Logistics Consultant Will Cost You

Over the past several years, we have seen a major change in the Logistics landscape. The capacity issues driven by the Covid-19 Pandemic created a vacuum that opened the door for many new Final Mile, and Middle Mile delivery options.  The added complexity in the industry also drove an increase in the number of companies providing Logistics Consulting services. There are many individuals that have left traditional Transportation Sales and Transportation Management roles, and thrown their hats into the Logistics Consulting ring.

Our customers often tell us that they are bombarded with emails from “Logistics Consultants” trying to engage them with the services they provide.

For shippers, this can make it extremely difficult to decide who they should partner with in the confusing world of self-declared “industry experts.” So individuals are left wondering what criteria they should use to develop a short list of candidates that can drive the best results.

We recently witnessed one such attempt to narrow the list of companies being considered for Contract Optimization services. A company with a significant Small Parcel spend sent an email out to a large number of Logistics Consulting companies, indicating that they were looking for help with negotiating their current Small Parcel agreement. This company only provided the name of their current parcel carrier, along with details of their current annual spend.  They asked that the consulting companies respond with the following three pieces of information.

1. Percent Gain Share (the percent of confirmed savings that the consulting company would charge to provide these services).
2. Number of years of the gain share (how many years the consulting company would require to be paid for confirmed savings).
3. Estimated Savings (how much the consulting company feels they could shave off of their existing Small Parcel spend).

Obviously the intent of this email was to identify the companies that could generate the greatest amount of savings, and charge the least amount of money to accomplish those savings. This seems like a logical vetting process to minimize the number of candidates being considered, and we understand why a company might take this approach, given the large number of companies vying to capture their business.

However, based on our long term experience, we feel that this approach overlooks the critical aspects that shippers should consider when choosing a Logistics Consulting partner in the Post-Covid world.

First of all, not having a solid understanding of a shipper’s existing shipment characteristics, pricing and discount structures, as well as their current contract provisions makes it impossible to estimate savings potential. There might have been a time when Small Parcel Carriers would be willing to do anything to avoid losing packages (even if it meant taking package volume at a loss).  This made it easy for shippers and their consultants to expect double digit cost reductions every time agreement renewal time came around.

So, pre-Covid, it was probably safe to provide blind estimates of potential savings.  However, the tightening of high quality Small Parcel capacity has created a new approach for the major Small Parcel carriers. We have all heard about FedEx’s profitability struggles, along with UPS’s “Better Not Bigger” strategy (recently changed to Better and Bolder.) With this, the ability to automatically assume large savings potential no longer exists. Based on our long term industry experience and insight, we feel that providing a savings estimate based purely on carrier spend can be extremely misleading, and often results in major disappointment for shippers.

The only way for shippers to maximize savings is to partner with companies that have developed the experience, expertise, technology and resources that allow them to take a much more surgical approach to negotiating carrier pricing. It is not practical to just throw something at the wall and see what sticks! In the new world of carrier pricing, it is imperative to have a solid grasp of current market conditions, along with the analytical abilities to drive the greatest overall savings.

We realize that Gain Share terms should be an important part of the decision process for shippers. However, it should definitely not be the only factor.

Choosing to partner with a company just because they work on a smaller gain share percentage might not deliver the best overall results.

Shippers need to consider what they will be getting for their money. They must be sure that those that they partner with have the skill set, technology, and resources that will guide them throughout the process.

Important questions to consider are:

1. Does my consulting partner truly understand my goals and desired shipping strategy?
2. Will my consulting partner have the ability to provide accurate, ongoing analysis of carrier offers to confirm TRUE potential savings?
3. Will my consulting partner have the ability/ resources to quickly turn analyses around to help expedite the negotiation process?
4. Does my consulting partner have access to a large, proprietary data base of current carrier billing data that will enable them to create realistic incentive targets?
5. Does my consulting partner have a long term, proven track record in the industry?
6. Is my consulting partner in tune with the current Logistics Market trends, and have they adjusted their strategy to help drive maximum savings for customers?
7. Can my consulting partner provide coaching and insight that will help reduce anxiety and ensure optimal results?

Choosing the correct Logistics consultant can be extremely impactful.

For example, if a shipper partners with a less experienced consulting company that takes a 20% gain share and they help generate savings of $500,000/yr., the net benefit to them would be $400,000/yr. However, if they had chosen a more experienced company that works on a 30% Gain Share and that company is able to achieve savings of $1,000,000/yr., the net benefit would be $700,000/yr. Obviously experience paid off in this scenario!

The point of all this is that who you choose to partner with can make a world of difference in your company’s efforts to reduce costs.

Now we’d be remiss if we didn’t do a shameless plug. After all, when you’ve been in this business for nearly 50 years, you know what works for clients and what does not.

That leads us to our client’s “bill of rights” if you will. It’s what you can expect to receive, what we guarantee, to you.

If you choose to engage ICC Logistics in your Contract Optimization process, we can guarantee the following;

1. We will not provide you with misleading savings estimates just to try to gain your business. Our business has been built around integrity, and we will provide this to you throughout the process.  Transparency is key.  No surprises here.
2. ICC is in a position to drive maximum savings due to our long term experience, expertise, proprietary technology, and unique insight.  Our mandate is to use that experience to YOUR advantage.
3. We will negotiate a Gain Share percentage that is fair and competitive in the market place. This will be based on your unique pricing scenario, to drive the best results possible.  No cookie cutter programs for you.  We know you’re unique and you need a program that is as unique as your business.
4. Our free Bench Marking Analysis will provide you with a deeper dive into your shipment characteristics, and reporting that can help you make important transportation decisions.  Data is Powerful.  It will make you a Superhero.  Be the company superhero.
5. And, finally, you will not be disappointed!

If what you read resonated with you, give us a call, you won’t be disappointed.