Strategies and opportunities for the Local Hero carrier: blog article

The Local Hero Forwarder - a dying species?

Regional know-how and individual service as survival strategies
What benefits local freight forwarders need to take advantage of – and how they can survive.

The logistics market is increasingly determined by global logistics service providers, and the German industry giants have long since become international network forwarders as a result of acquisitions. Their service can be assembled easily through automation and standardization, is transparent, comprehensible and attractively priced for global customers. Can the local freight forwarder survive this development – and continue to counter it with genuine added customer value in the future? Absolutely.

How the major Global Logistics Service Providers are threatening to displace the local freight forwarder

Today, international and large customers often demand key account management that should have global access to services as far as possible. At the same time, uniform transport management systems, automated one-file systems and the efficiency of network forwarding companies increase. As a result, customers can put together their own offers quickly and with little effort, book entire services in a standardized manner and track their status at any time. The large network forwarding companies thus save considerable administrative effort and can pass on the savings to the customer in terms of price. On the other hand, they attract various worldwide target groups with supposed full service and supposedly maximum transparency.

In addition, Global Logistics Service Providers are often able to offer customers much longer payment terms that exceed the financial capacity of medium-sized freight forwarders.

Can comparatively small local forwarding agencies still keep up with their competitors with their largely analogous services, non-standardized services and, at first glance, less attractive offers? Or is the local freight forwarder a species threatened with extinction? Firstly, his extensive local know-how is a decisive argument for him as a specialist service provider. And secondly, how much he is willing and able not to standardize this service, including ideal customer service, as well – on the contrary, to personalize it further individually and according to need.

Deep on-site know-how is and remains a strong advantage

Due to their regional focus, local forwarding agents have the knowledge, experience and skills that make them valuable logistics partners for the national and international economy. This includes their long-standing access to regional markets and their suppliers – and proven know-how in locally optimal supply chain handling:

A reliable network of carriers:

The local freight forwarder does not have to anonymously select the necessary transport service providers according to the supposedly best price performance ratio. Instead, within his network of experience he can count on valuable knowledge about actual capacities, qualities and competencies. This is an essential warrantor for reliably scheduled transports at all times – especially on the urgent spot market.

Knowledge of regional logistics networks:

Thanks to their long term presence, long-term partnerships and not least their active role in established organisations and cooperations, local freight forwarders have deep personal insights into regional logistics networks. Because they themselves are part of these networks and have often helped to build them up over decades of work, you can fall back on personal capacities and competencies.

Specialisation and special commodity focus:

Local forwarding agents often also specialise in the transport of special commodities. Their in-depth knowledge of the ideal supply chains and transport modules makes them trustworthy experts for the relevant markets.

In-depth knowledge of local capacity utilisation:

Today, of course, even the most standardised forwarding service providers are able to take account of known international and national peak loads. However, automated inquiry processes and service employees who have only been trained in standard processes have little knowledge of  smallest regionally specific load deviations and location-dependent bottlenecks. The freight forwarder, however, who is experienced on site, is able to incorporate this knowledge into reliable scheduling calculations.

Personal understanding of customer requirements:

 The local forwarder can also meet his regional and regular customers with a personal and deep insight into individual requirements and specific needs. Often this valuable understanding continues to grow through constant support, even in times of entrepreneurial change – instead of being lost in a one time transport service.

Future potential of the specialized offer: individual and tailor-made services

This versatile know-how and experience advantage can and must be used by the local forwarding agent to avoid emulating the large network forwarding companies in automated processes and standard offers. It is high time to let go of simple price reductions and undifferentiated package offers – and instead focus all your energy on flexible (re)action capability, tailor-made offers and individual service! The survival strategy and future viability of local freight forwarders should be called a “sharpened offer”. This is exactly where our own advantage lies.

Standard services, such as those mainly offered by Global Logistics Service Providers, always also mean: allowing as few questions as possible and working with as little customer contact as possible. More than ever, the local freight forwarder must counter this with tangible added value for the customer. And this added value is the ability to provide personal and individual advice and comprehensive support and to use own local expertise for flexible, adaptable quotation and order fulfillment. This, of course, requires increased expert and individual customer contact, preferably around the clock. However, an expansion of the support service not only ensures future viability in itself – but also a higher earnings potential in the long term: because standard services achieve ever lower margins. Instead, the local freight forwarder must make differentiation his motto and be in a position to adapt the offer and service flexibly in line with requirements. Then, by successfully solving individual customer requirements and optimally adapted supply chains in contrast to standard offers and standard strategies, he will also be able to achieve higher margins. And this added value will also be worth more to customers in the future!

The double effect of not having the large network forwarders determine either ones own range of services or the margin to be achieved will ensure the survival of the local forwarder. Moreover it will be  its promising potential to be deliberately chosen by the customer in addition to the global logistics players and even to bypass them.

About the author Martin Sieg

During his long career with logistics companies such as Hapag LLoyd, Bolloré Logistics and Rhenus Logistics and as a freelance expert for Mergers & Acquisitions and long-term partner of WCL- WORLDWIDE CONSULTANTS IN LOGISTICS GMBH, Martin Sieg has gained a wealth of experience and sound expertise: on the logistics market in general and on the requirements of medium-sized companies in particular. As a blog author, he is not only an observer and advisor, but above all an open dialogue and contact person for medium-sized entrepreneurs. So Martin Sieg is always looking forward to personal exchange and your questions.