Cutting costs should not be confused with rate reduction

As South African shippers continue to cut operating costs following the economic downturn, logistics service providers should weather the storm by sharing assets rather than heading for the trenches and turning inward. Speaking at the Transport Forum in Johannesburg last week, Imperial Logistics marketing director Abrie de Swardt said the global economic downturn of 2009 had resulted in logistics service providers having to contend with several challenges such as the cutting of operating costs, unpredictable demand, volatility in fuel costs and currency valuation, and excess inventory. “Cutting costs should not be confused with a reduction in rate,” said De Swardt. “It is going to take countries across the globe years to recover from the global downturn and therefore we will continue to see costs being cut.” He said as a result shippers were also improving forecasting and inventory management. “Outsourcing is not a fad or a passing trend. The most outsourced business service globally is logistics and it has become a viable option for companies.” De Swardt said it was important for logistics companies to show a willingness to share risks and rewards as shippers continued to outsource a wide variety of logistics services. “The most frequently outsourced activities tend to be those that are more transactional, operational and repetitive. Logistics companies will find themselves to be more desirable to shippers if they offer multiple and integrated activities as well as some form of analytical or solution-based contribution to the client,” he said. Calling on shippers to allow logistic service providers more access to information, knowledge and strategies, De Swardt said it was important to develop true partnerships. “Shippers must believe in our ability to take the real cost out of their supply chain otherwise it will always remain a discussion about the lowest rate per lane. Success lies in working together as logistics service providers.”