Shipping is the business of transporting goods from one location to another. It originally referred exclusively to transport by sea. However, its modern-day definition has expanded to include transport by air or by land. Sea transport is one of the cheapest modes of shipping. Following it is land transport (i.e., road, rail and pipeline) with air transport being the most expensive and fastest of the three major categories. Intermodal transportation or shipping refers to the use of more than one mode of shipping to transport goods. Trade brings about a lot of shipping companies that intensify competing in the shipping business.
Sea transport is the most common channel for shipping. Sea transport is popular among companies competing in the shipping business because it is the cheapest means of transportation. Fleets of ships are the lifeblood of the world economy, which occupy about 90% of international trade. The shipping industry facilitates both domestic & global manufacturing and trade via transportation of commodities and finished products. It also caters directly to consumers through door-to-door services provided by freight or courier service companies.
With all those mentioned above, we can see the great need of shipping business in the world economy today. However, the industry, like other industries, has been facing many challenges. One of these challenges is the competition. Therefore, this piece would be focusing on keys that can be useful in competing in the shipping business.
Services offered by shipping companies
Shipping companies offer several services that vary for different companies. These variations are what differentiates companies from others competing in the shipping business. They provide services which include:
Shipping is the first service a shipping company should be capable of delivering. As mentioned earlier, shipping often made through different channels or modes. Highlighted below are the different types of transportation:
Land (or ground) transport
Land transport includes road, rail, and pipelines. It is often a domestic shipping option since it mostly operates within national borders. Its shipment may contain a full or mixed load. It is the most flexible among the different modes. It frequently works with courier delivery companies to provide door-to-door services to its customers.
Sea transport covers the open sea and other smaller water bodies like rivers. It usually handles international shipments, which are mostly in full containers. It is the slowest mode of transport. Deliveries may require a week or several more to reach their destinations depending on customs clearance, the size of the materials in transit, weather conditions, amongst other delays. Some shipping companies or freight forwarders also arrange for door-to-door services for their customers.
It is the fastest and as a result the most expensive means of transporting goods and finished products. Shipments with short transit time usually require air transport. It includes airfreight services arranged by the shipping company. It has both national and international coverage.
Warehousing is another essential service provided by most shipping companies. Warehouses are needed by shipping companies to store containers of goods or products for their customers temporarily. They serve as storehouses before they are cleared or transported out to the customers.
For maximum efficiency, most shipping companies have computerized warehouse management systems. These internet-enabled systems give real-time tracking of inventory, select & identify picking locations, and stage products for landing. This system ensures that no item is damaged, lost, or mixed up. Besides, they provide that return goods and backorders can be recorded and tracked with ease.
Some shipping companies also allow for in-house packaging specific to customer requirements. Additional services are value-added and save customers from the stress of doing it in their facilities or elsewhere.
Outbound services refer to the processes involved in moving or picking a product from the warehouse to the customers. Methods of picking depend on the company and the product type. For instance, sometimes, products are selected by order. In some other cases, products may be picked by batch or zone depending on what the customer wants. The products are packed after picking, checked, and loaded.
All these processes and services should be done carefully to prevent damage yet quickly to ensure products delivered on time. Customers should be able to track the progress of the shipment through reliable software. Out-of-stock situations, too much inventory, late deliveries, and incorrect order fulfilment avoided. When these keynotes are in place, it will help in competing in the shipping business.
What is the shipping trade war?
Shipping trade war refers to measures used by shipping companies to gain comparative advantages over other competitors. Competition is standard in any business. And it comes in different levels and forms. Companies competing in the shipping business are most times on the move. They are always trying to develop plans to help meet the needs of the customer. They are still of the mind to gain comparative advantages over their competitors. These plans may bring profit or loss to the companies which use them when competing in the shipping business. Some measures used by companies while competing in the shipping business include:
Service: Competing in the shipping business
Service is one crucial factor that sets companies apart from their competitors. It refers to pre-sales and post-sales services they offer. r. It is often one of the primary elements customers look for in a shipping company. Companies try to stay ahead of the competition through the use of different approaches to their customers’ problems. It is important to show customers what makes your company unique. Meeting the customers’ specific needs by providing exceptional services that benefit them is an excellent way to start. The surest way to lead others competing in the shipping business is to offer customers quality service.
It is also essential to find your niche, i.e., a particular customer base to which you wish to cater. A shipping company can direct its resources efficiently and effectively using a reliable customer base. This Strategy will help the company in gaining the trust and confidence of the customers. Companies that have better service plans for their customers will have an advantage over other companies competing in the shipping business.
Price: Competing in the shipping business
Price is another important used by companies competing in the shipping business. Generally, reducing the rate attracts more customers. This suggestion may sound easy, but it isn’t always the case as customers are still wary about the quality of service gotten for a special price. In most cases, this approach comes with a compromise in class, of which the customers are usually aware.
The question the company has to answer is if the approach will be profitable for them and also favourable for its customers. It is advisable to choose a price range relatively cheaper than other competing shipping companies without sacrificing profit. It should be affordable and accessible to customers who may be willing to pay extra to get extra. Irrespective of the price, the benefit of the service should be more than the cost.
Alliances: Competing in the shipping business
Alliances refer to cooperation agreements between two or more shipping companies to consolidate their influence and resources. Companies usually make alliances when competing in the shipping business to make them stronger. Global partnerships are one of the characteristic features in the shipping trade business. It can take the form of coordination of prices and capacity. Alliances may involve the sharing of vessels to generate operational efficiency and have broader coverage.
Alliances cover the use of ships & containers, sailing schedules, and the use of standard terminals. But, they don’t include joint sales, marketing, ownership of assets, profit and loss, and revenue. Alliances facilitate two elements that shipping companies compete on: low price and broad service coverage. Economies of scale and full scope are generated in collaboration as they help lower operational costs. Companies with alliances in the shipping industry can give a more comprehensive range of services. Subsequently, this gives the companies access to a more extensive customer base without stressing their resources. Alliances enable companies to cater to customers effectively and efficiently.
Same-day delivery: Competing in the shipping business
Modern retailers have found that price and quality alone is not the only criterion for customer satisfaction. The speed and efficiency at which the product gets to them also add to user experience hence the need for same-day deliveries. Same-day deliveries are courier services offered by courier companies like ViaMe and others. They cater to people who require fast & effective delivery and package tracking solutions. However, the following same-day delivery challenges need to be anticipated and adequately dealt with for hitch-free services:
Cost: Competing in the shipping business
Same-day delivery is expensive, and in some cases, may not be cost-effective. If it isn’t well planned and managed, it can affect the profits of the shipping business. Many companies have lost at one point, in the place of offering same-day deliveries. Therefore, smaller/new companies must be sure that the venture has enough to offset any possible loss that they might incur. It is also essential to know the total cost of operations needed to start and sustain the business while competing in the shipping business.
Logistics: Competing in the shipping business
Logistics is perhaps the most critical same-day delivery challenge faced by prospective shipping companies. It is so crucial that even with enough capital, the venture can still die. Overlooking logistics is risky, as it is vital to the smooth running of same-day delivery services of the shipping business. Areas with high customer demand and sound transport systems need to be targeted to get maximum engagement.
Logistics involves proper planning that links company goals to customers’ needs. It ensures that appropriate steps are put in place to satisfy customers. Customers should also know which products qualify for same-day deliveries and which ones don’t. All logistics should be covered when competing in a shipping war.
Location: Competing in the shipping business
The site or location of a courier service company offering same-day deliveries is significant. Shipping companies should locate their headquarters or distribution centres; such as warehouses or depots near metropolitan cities. It most times facilitates ease of transportation and timely arrival of products.
An excellent location near the customer base helps maximize profit since they will be closer to the demand. It makes the company more accessible to customers.
Staff: Competing in the shipping business
For a same-day delivery program to work, a good team is needed. Depending on financial and technical resources available, new staff hired, or existing ones can be used (without affecting previous protocols). Either way, the appropriate personnel should be employed to ensure efficient service. A company with excellent staff and proper protocols provides greater effectiveness and efficiency. Customers rate based on services rendered by the workers. Also, they often refer them to others in need of better services. It gives the company a good reputation and enables them to grow faster.
In conclusion, the resolution of the aforementioned same-day delivery challenges will be useful for all parties involved. The companies will get maximum profits, and the customer gets maximum satisfaction from the services rendered. Also, the stability of the company to competing in the shipping business will be guaranteed.
Competitions in the courier business
The courier business is an extremely competitive industry. Courier companies are expected to deliver the product with speed and efficiency. Each company has their competitive strategies in which give them a comparative advantage over other competitors. There are three competitive strategies that shipping companies adopt in competing in the shipping business, and they include Cost advantage, Differentiation, and Focus.
Competing in the shipping business is usually based on delivery, quality, and price. Increased competition makes an industry less attractive for new entrants and may reduce the profit of the players or competitors. It pressures the companies involved to be more proactive. It also helps them to come up with competitive strategies in response to expected changes in the shipping war. These strategies help companies gain a comparative advantage over others.
By identifying their core strengths, companies can concentrate and develop on those aspects that give them an edge over their competitors. Some of the strategic plans that can be employed by the shipping industry in competing in a shipping war.
Cost advantage strategies
A cost advantage is a form of strategy where the company chooses to be a low-cost producer. Here the company serves many industry segments and may even operate in related industries. By producing high-quality products or services at low prices to customers, it hopes to gain the advantage.
However, to maintain this strategy, the shipping companies require a cost reduction in all aspects of their business. Also, they need a full distribution chain, preferential access to raw materials, labour, components, and other essential inputs.
Another strategy used in competing in the shipping business is the differentiation strategy. Differentiation involves creating a product regarded as unique. For this Strategy to be successful, the unique features should provide superior value for the customer as compared to the others. Customers will be brand loyal to the company since they regard their product as the best. Differentiation provides a sort of difference from other competitors.
To maintain this Strategy, the company should support creativity, good cooperation with distribution channels & strong marketing skills. It also needs highly skilled, creative, and innovative personnel that can ensure continuous improvement of the company.
For some companies, to stay ahead of the competitors in the courier business, they adopt the focus strategy. Here, the Strategy is to focus on a select market or niche. It can also be called a niche strategy. It is hoped in this Strategy, that by concentrating on one or two market segments, the customers can have their needs appropriately met. They achieve this in one of two ways, one of which is called cost focus. The cost-focus Strategy exploits the differences in cost behaviour among the target market. Differentiation-focus Strategy is another way that operates on the unique needs of buyers in the target market. Unlike the previous strategies which focus on a broad market, focus strategies are more concerned with a narrow customer base. Therefore, they adjust their services to meet the demands of the customers.
Competition has been one of the drivers of the world economy in this present world. The race has permeated every sector of the economy without spearing any industry. In the shipping industry, competition has caused different shipping companies to develop many plans and strategies. Competing in the shipping business requires these strategies put in place. Therefore, shipping companies should adopt methods that would earn them a comparative advantage over their competitors. In fighting in the shipping war, shipping companies should make sure that they employ available resources to get maximum results.