FBJ 4 FREIGHT BUSINESS JOURNAL


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Issue 1 2015 - Freight Business Journal From the Editor


Why don’t we hear more about the freight industry, asked BBC presenter Naga Munchetty when she presented the BIFA Freight Services Awards a couple of weeks ago. The answer is that, apart from the odd visit by a four-football-pitch-sized ship or the occasional car carrier tipping over in full view of the Southampton shoreline, the industry goes about its work quietly and uncomplainingly. Aſter all, most of us never give the plumbing in our homes a second thought – until something bursts.


By Chris Lewis


Ask not for whom the bell tolls, it tolls for thee. Back in March 2012, CityLink boss Dave Smith warned, shortly aſter taking over at the troubled express package firm, that the UK sector industry was overstuffed with competitors and that something would have to give. Unfortunately, that something turned out to be his own company, whose owners threw in the towel on Christmas Eve. CityLink was never a big international player, being concentrated more on the domestic market, but it is at home that the biggest problems lie, he pointed out: “Outside the UK, in each of the major European markets, you find the national post office and 2-4 big carriers. In the UK you have the post office and 10-11 major carriers.” The number of competitors would have to be whittled down pretty drastically if the industry was to be profitable, he predicted. The trade unions criticised the timing of the announcement that CityLink was to go into receivership – most of the employees and franchisees would probably have been sitting to Christmas dinner when they learned the news – although the desire by the owners to cash in for one last Christmas was perhaps irresistible. The international parcels market is maybe slight less bloody, but it is still a battlefield. The European Commission’s refusal to countenance UPS’s takeover of TNT means that this sector too still has underlying structural problems.


What a difference a month makes. Prior to Christmas, all the talk was on how fuel prices were going through the roof and the baleful effects of the SECA emissions control area on shipping costs. Now, in mid-January, crude oil prices are in free fall. It will take time for this to be reflected in the actual prices paid by transport operators, at least in the shipping and airfreight where extensive use is made of forward and future contracts and the like. It will take even longer, doubtless, before the fall in the fuel price is reflected in the actual costs charged by carriers to forwarders and shippers. Bottlenecks in refining capacity may also mean that the fall in the price of diesel or aircraſt fuel is less than that for crude oil, or it may come later. But it is welcome news nevertheless.


The wider economic effects of lower fuel prices are a bit of a two-edged sword. On the one hand, if consumers are having to spend less on fuel, they have more cash for other things. Lower fuel costs should also translate into lower input prices for manufacturers of virtually all goods that are consumed on the planet, which should again give the wider economy a filip, while improving manufacturers’ profitability. On the other hand, quite a number of economies are heavily dependent on oil revenues, so the news may be less good for them. But the number of winners should outweigh the losers.


Guest editorial Combating commoditisation


The freight, supply chain and logistics sector may be the backbone of the economy, but that hasn’t stopped creeping commoditisation from setting in, forcing down prices and squeezing margins. Differentiation could be the key in a cut-throat industry, says marketing expert and founder of Actualis Marketing consultancy, Paul Kelly,


My first job, more years ago than I care to remember, was in forwarding. It was the one of most exhilarating experiences I ever had and was the reason why I jumped at the opportunity to return to the industry 20 years ago aſter a spell in design and advertising. I had admired my original colleagues’ immense


knowledge, but could not understand their insistence that clients did not understand or appreciate the service we delivered, which was why they were consistently forcing down the prices we charged. It’s sad to wind forward a couple of decades and find


that, for many forwarders, little has changed. Perceptions are still dominated by the largest companies, with the majority of small and medium-sized firms leſt to


fight over a perceived dwindling market share. This dominance is oſten


unwarranted, as smaller players may be more than cost- competitive and able to provide superior service through their agility and ability to focus more completely on the customer. But the prospective customer does not see this, as the noise from the leaders marketing machine drowns out the competition. The Pareto 80/20 principle would suggest that 80%


of the sector’s revenue is generated by 20% of the largest forwarders. But the reality is that the largest 20% have never cornered more than 30% of the market, because it is so fragmented. Market dominance is an illusion. Of course DHL, K&N, ACS et al are huge and will


always feature on tender lists - but there is still enough of a market leſt to sustain the remaining 1,000-plus forwarders. These have two primary challenges: to raise their profile above the noise; and differentiate, so that they are not just competing on price. Take a look at the recent BIFA freight service


award winners and finalists and you’ll see examples of forwarders rising to these challenges. Rubbing shoulders with Schenker, DAMCO and Panalpina, they really do belong on the same stage.


Consider three of the finalists: Woodland, Brunel


and MotoFreight. These are forwarders with distinct identity, considered offers and well-executed marketing that positions them uniquely and provides distinct differentiation. MotoFreight targets its niche very effectively,


engaging with it actively to become part of it. Brunel makes use of the tools at its disposal to


communicate a professional image, that is clean and efficient. They are active on social media and their web presence is clear and effective – and it certainly oozes confidence. Woodland Group has clearly embraced marketing


and developed a powerful brand, that is seeing them consistently carve out market share. The company has vision, ambitions, clear objectives and a growth plan, that the whole business has bought into. The other small finalists all share positive attributes.


Not least the fact that they have been short-listed by BIFA for a freight service award, which immediately earns them an independent endorsement of their capability and positions them above their competitors. Whoever said trade awards are a waste of time?


///OPINION


FBJ is the only UK and one of the few pan-European Multimodal newspapers. The comments we have received prove there is still room for a hard copy publication with the freighting industry. You don’t have to look at a screen all day!


FBJ boasts the most informative and authoritative source of information with unrivalled in-depth knowledge of the rapidly changing freight business environment.


As the definitive publication within the sea, air, road and rail freight sectors, each issue includes regular news and analysis, in-depth coverage discovering the business decisions behind the news stories, shipper and exporter reports, opinion, geographical features, political and environmental issues.


If you have any stories or letters which should be of interest or any feedback on FBJ, please contact our editor Chris Lewis - +44 (0)208 6450666 chris.lewis@fj-online.com


next issue >> circulation >>


Our next issue will include features on Ireland, Freight Finance and Security. There will also be our


regular IT Section and news pages. For further details contact: John Saunders - +44 (0) 151 427 6800 john.saunders@fj-online.com


To guarantee your personal copy of FBJ please register by emailing your details to circulation@fj-


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