31 Aug Common Mistakes Made By Freight Companies
Freight companies make mistakes alarmingly often. In a race to dominate a competitive market, leaders make rash decisions, putting their enterprises in jeopardy.
In this post, we explore some of the common mistakes Australian logistics firms are making right now. Read on to learn more.
Under-Pricing Just To Get A Job
Australian logistics is a competitive market. And while it is growing at a healthy rate of 5.85 percent per year, profits are hard to come by. Figures reveal more than 47,000 freight transport firms in Australia are competing for business, driving down prices.
Under-pricing or under-cutting just to get a job is bad corporate policy for several reasons. First, it prevents you from offering workers competitive wages. Employees feel demotivated and are constantly on the lookout for roles that have a better rate of pay.
Second, it devalues your brand. You become known as the cheapest option in the industry, affecting how clients perceive you.
Finally, it damages the industry as a whole. When freight becomes a “race to the bottom” and everyone tries to charge the lowest price, quality suffers, workers quit, and innovation grinds to a halt. Firms need surplus funds to invest in their operations so that they can improve services, and enhance the client experience.
Charging Too Much
Similarly, charging too much is also a problem. Company bosses will often ask customers for more money than their services are worth, leading them to switch to lower-priced rivals.
Charging too much is sometimes a sign of greed, but not always. In many cases, logistics firms simply don’t know how to correctly price their services, particularly those new to the market.
To improve your prices, use standard pricing techniques. For instance, charge customers based on:
- The number of products they want to ship
- The number of units in the order
- The size and weight of products
- Any special packaging requirements, fillers, or branding elements they want you to include
Most logistics companies calculate rates based on a combination of volume and weight. The heavier and larger the freight, the more it will cost to ship. Getting the algorithm right lets you charge a competitive rate while bolstering profits at the same time.
Promising Services You Can’t Deliver
Promising services that you can’t deliver will damage your credibility. Clients will complain, leading to a bad reputation.
To manage customer expectations, offer excellent customer service. If you expect delays, make sure that your team relays these to the customer immediately, managing expectations and providing them with real-time information on delivery status.
You can also experiment with underpromising what you know you can deliver. For instance, you might tell clients that their products will arrive within two weeks and then deliver them after five working days.
You should also communicate why delays occur. This way, you can avoid leaving clients with the impression that you are incompetent. For instance, if there is a problem shipping because of an accident on a major highway, tell customers what has happened and what, if anything, you are doing about it.
Using The Wrong Vehicle For The Job
Lastly, freight companies sometimes make the mistake of using the wrong vehicles for the types of jobs they want to target. This reduces orders and leaves them having to search for something else.
Firms that commit this mistake usually lack understanding of what goods each type of vehicle hauls. Here’s a quick run-down of what freight companies use various vehicle classes for:
- Flatbed freight truck: A truck with a flat open trailer at the back with no sides or roof, used for hauling machinery, cars, construction materials, and oversized cargo.
- Tanker freight truck: A truck with a cylindrical tank used for transporting liquids like fuel, milk and chemical fluids.
- Semi-trailer truck: A truck with a trailer that lacks a front axle and couples via a hitch to haul large cargoes over long distances.
- Refrigerated truck: A truck with a temperature-controlled trailer to keep perishables, such as fresh food, cool during transport.
- Step deck freight truck: A truck similar to flatbed trucks except the trailer bed has two decks. Firms usually use these to move tall cargo, allowing it to pass under low bridges.
- Dry vans: Dry vans have an enclosed trailer attached to protect goods from the elements. They are one of the most common truck types.