Competition is one of the constants in business, something that can spur you on and make you better, or something that can bring you down..
Every industry has competition in varying degrees.. Some companies look at their competition and say “Yeah ok, whatever” (think Google/Facebook)..
Some companies look at their competition and say “Oh crap, that’s close” – like a lot of companies in the shipping and freight industry..
While competition comes in various forms, there are several cases where you may really struggle to find a way to stand out from your competition..
Let me explain further with some examples relatable to the shipping and freight industry..
1) Take the global container shipping alliances as an example
These global shipping alliances account for almost 83.80% of the global container shipping market and a customer shipping cargo anywhere in the world would have at some stage or other used one of these alliances/alliance partners..
When using the lines within the alliances your cargo will be
- On the same boat (literally)
- Calling the same ports
- Takes the same time to get there
- Loads and discharges on the named day
- Follows the same route
- Experiences the same conditions or delays
- You may be paying more or less same or similar freight rate
2) Take the South African Container Rail Freight as an example
Transnet Freight Rail (TFR) operates six major inland terminals and nineteen satellite depots that are strategically located across the country linking the South African ports to the main cargo centres..
Transnet has rail contracts with a few major container companies including shipping lines and rail operators.. Most rail customers will be using one of these companies for their rail movements
So if you are one of these rail customers, your cargo may be
- On the same train
- Calling the same rail terminals
- Taking the same time to get there
- Follows the same route
- Experiences the same conditions or delays
- You will pay more or less same or similar charges for the rail movement
3) Take the process of shipping as an example
In the process of shipping, your cargo/shipment will
- Go through the same shipping, clearing and forwarding process
- Documents will pass through same authorities
- Same documents/permits will be issued
As you can see, there are many common areas with the same functions and as a shipping line, intermodal operator, freight forwarder or other service provider in the shipping and freight industry you should ask the question :
While there may be several methods of tackling competition, one of the proven methods to compete in any industry is to DIFFERENTIATE..
What is the meaning of Differentiate or Differentiation..??
Noun : the action or process of differentiating or distinguishing between two or more things or people.
Technical : the process of becoming different by growth or development.
Here are 6 differentiators to help you compete in the shipping and freight industry :
1) Compete by Differentiation in service
While routing, transit, ports etc may be common, one main factor that will set you apart from your competition and something that your customers look for is SERVICE.. The pre-sales and after-sales service that you offer..
Make it easy to deal with you
- As much as you think this is a basic requirement, something as basic as this is a “big” differentiator when it comes to customer service and customer contacts
- Am not sure how many of you struggle to find a simple telephone number on a website of many companies.. I have seen many websites of companies where a simple telephone number maybe buried a few pages deep or all you get is a contact form to fill up..!! How frustrating..
- While it is natural to go that route when you have 100s of offices worldwide, it can still be made easier in a lot of cases..
- Ease of doing business with a company is something that a customer is always looking for, so take the time, make the effort, be accessible and make it easy for the customer to deal with you..
Make your process unique
- Have a different approach to your client’s problem, don’t treat your customer as a number
- Show the unique benefits your client can enjoy by using you
- Differentiate your business model
- Give your customers a different business model to look forward to and work with
- Develop your own unique business model which is not available in the market (like a 24-hour access point for any port/customs/transport queries)
- Whether it is a service or a product, customers are always looking for value in their purchase
- There are many cases where customers will pay more for products or services with value
- Find your niche and offer the best value that you can to your customers
- Having the right personnel handling their business makes a big impact on your client
- Show the customer you take their business seriously and nominate the right person for the right job..
- Adding some high level subject matter experts to your team will create confidence in your services
Train, train, train
- No, not the rail variety, the training variety
- Training is an important and integral part of differentiating your services
- In order to provide an exemplary service, your team must be well trained not only in terms of your service offering, but also in terms of solving the customer’s problems and meeting their requirements
2) Compete through differentiation based on relationship
- NOTHING beats RELATIONSHIP when it comes to sustainable business development
- Many businesses survive due to the relationships that are created and developed between the seller and buyer, service provider and customer etc
- Businesses based on relationships tend to last much longer than other commercial or conventional businesses
- A big step towards this, is for you to be GENUINE in your approach to the client, their business and an honest intention to assist with their requirements
- In some cases it may take years to cultivate the kind of relationship where the customer gives you the business without asking what it costs because you have created that implicit trust in you and your service.. Yes there are several customer relations like this
3) Differentiate based on Reputation
- Having in-depth understanding of your market will establish you as an industry expert and creates a reputation around you and your business
- This helps you maintain your value in your industry
- This helps you gain credibility in your industry
- Reputational differentiation is an easy way to differentiate yourself in your industry so people know to ask for you by name
Use your reputation
- You have created a good image and reputation for your business and yourself through your high level of service, quality products, unique business model and performance
- Use it to your benefit and that of your customer’s
Be a specialist
- All clients have various pain points in their business
- That is why they need a service provider or someone to provide a solution and relieve them of the pain
- Specialise in solving a specific pain point in your client’s business.. For example, there may be clients who are successful in shipping overseas but have major problems in serving their clients inland in a particular continent (example Africa) or country (example India)..
- So you could be an inland movement specialist who specialises in assisting clients with this kind of pain.. Or you could be an Out Of Gauge or Abnormal Cargo transport specialist..
- Specialisation helps promote your services further and get you more word of mouth promo
- So don’t try to be a jack of all trades – be a master of one
- While this is usually successful if your field is rare, you need to keep innovating to stay ahead as your competition is usually waiting to emulate your success..
- Have a specific target market and be the best at servicing this market..
Show case success
- Show case your success stories across all your marketing mediums (social media, digital and print editions, blogs etc)
- Customers always look for success stories within your industry before deciding or settling on a service provider
- So, if you got it, flaunt it..
4) Compete and differentiate through Innovation
Which brings us to INNOVATION.. Probably the biggest buzzword to hit many industries in a very long time, especially of late.. But it is not just a buzzword like many others.. This is a serious buzzword..
The world is progressing rapidly and if you don’t innovate you will be left behind.. Combine traditional service with innovative technology..
The shipping industry seems to have been innovating, but of course a lot still remains to be done.. Here are some examples of Innovation in the shipping industry to inspire you :
- Conceived by Malcom McLean and created by Keith Tantlinger in 1956, the shipping container continues to inspire and evolve through the years..
- This innovation has helped bring the world closer and made globalisation a reality..
- Container shipping has grown from 56 TEUs in 1956 to 24,357,296 TEUs in 2021 – an increase of 43,495,100% in 65 years!!..
Intermodal freight trains
- Your goods from China to Europe taking too long by sea..?? No problem, there is an innovative idea for that.. It is called the Intermodal Freight Train..
- Read more about above example here..
Automated Container Terminals
Manual productivity at container terminals too slow for you..?? Ok, here’s an innovation that will save you time and ensure productivity with no smoke breaks or sick days..!! Automated Container Terminals..
Shipping costs per container too much for you as a shipping line..?? Ok how about we put a lot more containers on one ship to achieve economies of scale..??
The Triple E series (named Triple E due to its innovations in Economy of scale, Efficiency and reduction of Environmental impact) of ships of Maersk Line starting with MÆRSK MC-KINNEY MØLLER commissioned in 2013 with a capacity of 18,270 TEUs were widely considered as the forerunners of the ULCVs (Ultra Large Container Vessel)..
The order book of ULCVs has grown dramatically since then with all major players entering the fray to crown their ship as the largest container ship in the world..
What started out as an effort to optimise on economy and efficiency with an environmental touch on these size of ships in 2013, soon became kind of a mine-is-bigger-than-yours showboating..
Between 2013 and 2019 there were 8 “largest container vessel in the world” title holders operated by some of the world’s largest container shipping lines..
The increase in TEU capacity in the last 8 odd years within this ULCV class is around 5,694 TEUs which is the size of a regular container vessel still operating in many of the world’s trades now.
On the 23rd of April 2020, HMM, the 9th largest container shipping line in the world, became the latest title holder of the largest container vessel on the earth when they revealed “HMM Algeciras“, their first 24,000 TEU containership at a naming ceremony in Korea.
If you are wondering where is the innovation in this, firstly, imagine a single ship averaging +/- 400m in length, +/- 60m wide and +/- 73m high.. That is almost as long as the 1st hole Par 4 at Augusta or the equivalent of a 4×100 meter relay!!..
Secondly, imagine a single ship capable of carrying TWENTY FOUR THOUSAND TEUs in one go..
Thirdly, imagine this big ship requiring only around 22 crew members (in some cases less)..
Not just ships, containers are also getting smarter.. Containers that can be tracked, containers that communicates with you its data, its location, the condition of its cargo, whether the power is on or off etc etc
Smart containers allow real-time monitoring of the cargo, including temperature, humidity level and any other issues during transit..
5) Differentiate using your product
- Product differentiation and innovation like above go hand in hand
- Product differentiation is a main form of differentiation and
- Those that have innovated are ahead of the pack
Have a distinctive but flexible strategy for your product
- Ok, this is not an oxymoron and yes it is possible..
- Our industry does not have a one size fits all solution for its problems
- So you should have products and business strategies that are distinctive to you/your company but flexible
- A lot of big businesses don’t have strategies that are flexible and because of this they may not be able to compete against the smaller but more agile competition
6) Differentiate yourself and compete on price
- Drop the price and secure the business
- Although it may sound easy, it may not always be the case as the customers are much too wary about “what you pay for is what you get”
- In some cases, this type of differentiation comes with a big compromise in quality, something that some of the customers are well aware of
- In many industries including shipping and freight, this type of differentiation doesn’t even need a sales department or sales person to secure business
- Anyone with a phone can contact customers, offer lower rates and secure business
If you are wondering, why then I have shown this as one of the types of differentiation, it is because this form of differentiation is probably the most popular or most common in many industries.. In this day and age of depressed margins and revenue, everyone is looking to cut costs and what better way than to get your shipping rates as cheap as possible..
In spite of all above and as much as one may seem better than the other to different people, the best way of competing would be to choose and combine all the options available for you to differentiate and apply it strategically ad selectively..
- Pricing & service
- Diversity of products & services
- Innovation & products
- Becoming an industry standard
Ok, you read and understood all of the above, and some of the points mentioned above doesn’t come cheap.. So you may ask (or want to ask) “Ok, how do I know if the differentiation is really worth it though..?? How do I judge that..??”
Well you can consider your differentiation to be worth it if
- Is valuable and the change provides a benefit to the customer that is more than the cost
- Is important and the benefit that it delivers contributes to your customer’s business success
- Is unique and offered in a distinctive and fresh manner
- Is better, quicker and superior in terms of technological innovation
- Creates an emotion in your customer, like a quick and effective relief of their business pain
- Is tangible, recognisable and visible
- Is accessible and affordable to the customers who may be willing to pay the extra to get the extra, and last but not least
- Is profitable for you and the benefit exceeds the time and effort you have put into differentiating yourself
By differentiating yourself, you can
- Provide superior value to customers
- Create a powerful competitive advantage
- Give them a competitive price
- Boost the viability and profitability of your business
- Grow & enhance your brand and brand value
Adapting the famous words of Christopher McDougall in his book “Born to Run: A Hidden Tribe, Superathletes, and the Greatest Race the World Has Never Seen”
Every morning in Africa, a gazelle wakes up.. It knows it must outrun the fastest lion or it will be killed..
Every morning in Africa, a lion wakes up.. It knows it must run faster than the slowest gazelle, or it will starve..
It doesn’t matter whether you’re the gazelle or the lion in the shipping and freight industry..
WHEN THE SUN COMES UP, YOU’D BETTER BE RUNNING AND DIFFERENTIATE IF YOU WANT TO COMPETE..
Really, we thank you vety much for such high efforts which just found your website this eveing and Im reading more than 4 articles , so pls assist to notify me to my given email on all your new articles continuously.
Thank you so much for your service in educating us. you are very generous and kind.
please one quick question, i need your help to figure out a mission statement that will help me actualise all these principles you listed here (service, relationship, reputation…). i would like the mission statement to cover all of them. i want it engraved in my core. please help me. much thanks!
Thank you for the article it has enlightened me on how to compete effectively especially when it come to innovation and the cost that comes with it. In most cases we are afraid of it not knowing if it will profit us or not
I would like to thank you for the efforts you have made in writing this article, 6 points to help you compete in the shipping and freight industry.
Great article, thanks! I agree, that accessibility and HQ service is what makes you different. We just moved to Klaipeda Free Economic Zone and our clients satisfaction is much more higher than it was before. We can now provide valuable logistics service offering reasonable prices.
So anyone who is struggling with deadlines and quality- I suggest you to take a look for a better location of your business, perhaps relocation will be the best solution. Especially if you aren’t a part of global alliance. Find the place that offers you something similar. The keyword for everyone is profitable and competitive area. Find your own and make the most value of different economic zones.
WOW, what great information you have shared through this article. Thank you for this beautiful article.
This was a pretty well-captured write-up. Thanks Hariesh.
You are welcome Mui.. 🙂
That was a very brilliant expose” and a must read piece of an article, very insightful.
Thanks Kwaku.. Glad you enjoyed it..
I totally agree with you . I find clearing agents and other service providers take your business for granted . They need to know your business so that they can provide value added service . I also find inexperienced people being employed eg a customer retention department comes to visit I could see on the 1st visit this person does not know shipping .