Freight Shipping: Service vs. Cost

80 percent of shippers think service
is more important that cost
(source: Inbound Logistics).

According to the latest market research in Inbound Logistics magazine, “Fifty-one percent of shippers cite poor customer service as the number-one reason for botched outsourcing partnerships, followed by failed expectations (25%), and cost (9%)…”

Why is customer service growing in value?

It’s possible that with tightened trucking capacity and higher linehaul rates that service quality is the main differentiation between carriers and 3PLs. If shippers cannot control the high-demand, low-supply marketplace, than the only choice they have when choosing a freight shipping partner is to go with the one that provides the best service. When it becomes more and more difficult to compete on price, 3PLs and carriers have to step up their game and focus on providing exceptional customer service.

Should shippers still shop around for the best price?

Shippers know that cheaper isn’t always better. Along with that low price tag come a slew of customer service snafus just waiting to happen. With supply and demand regulating prices, it takes away the need for shippers to work with more than one partner. To the contrary, “Eighty-four percent (of shippers) use more than one 3PL, while only 16 percent have found a one-stop-shop solution,” says Joseph O’Reilly in Inbound Logistics. What do those 16-percent of shippers know that the remaining 84 percent don’t? Is there something to be said for being a brand loyalist? Do repeat shippers tend to receive a higher level of customer service from their partner? It’s highly possible that these 16-percenters found the Holy Grail of 3PLs and just see no need to sever the relationship.

 Does poor customer service end up costing shippers more in the long run?

It can. Supply chain delays due to damaged, late or missing cargo can create a Domino effect, increasing costs and production time across the board. Aside from theft and loss, most blunders are a result of poor communication between the shipper, carrier and/or 3PL. An example of this is if a guaranteed shipment gets delayed due to a missed pickup and the 3PL/carrier doesn’t provide another option to meet the delivery date. Frustrating for everyone involved, but if not handled properly than the shipper pays the ultimate price (especially if we’re talking about perishable food).