1. Changing Shipping Supplier:
What Makes A Shipper
Switch?

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5. With the right partner, a
shipper and carrier/freight
forwarder can sweep aside the
competition, allowing for
incredible growth for both
parties. However, the changing
environment may have a
profound impact on supplier
relationships.

6. Based on several customer interviews
we conduced, it is price, risk
management and loss of trust that
stand out as the main reasons for
switching suppliers.

7. PRICE

8. We asked one of our shipper customers to list five reasons that
would cause a shipper to switch carriers. He responded fast and
directly - with pricing 5x.
Another customer noted the lack of willingness of incumbent
carriers to reach consensus on
What the appropriate price level is. Suppliers distrust and
question the new tender results and sustainability of prices
offered by new suppliers.

9. Risk Management

10. Businesses are evolving as customer requirements change. With
such changes comes the need to manage risk.
According to some shippers, a shift in trade lanes due to
changing needs or a significant volume increase on another lane
may result in the In
bility for the incumbent carrier to provide the requested capacity.

11. Loss Of Trust

12. Trust is critical to any relationship and a bad experience or
contractual failure can destroy a shipper and supplier partnership
quickly.
A bid is started in order to obtain a benchmark.
The benchmark can then often be strategic pricing from a new
supplier because they want to establish a relationship. However,
three months into the new contract, the supplier goes back to
increase the price.
Inevitably, inaccurate information and/or inability to stick to
commitments could mean
Renegotiation and changing suppliers sooner
Than they may anticipate.

13. WHILE FUEL ISN’T AS BIG A FACTOR FOR RAILWAY
COSTS, IT DOES MAKE UP APPROXIMATELY 20
PERCENT OFTOTAL OPERATING COSTS, AND
CONSTITUTES A MAJOR LINE ITEM FOR RAIL
COMPANIES
The Aftermath:

14. In the end, there are a number of reasons as to why a shipper
would look to switch suppliers. Although, most of them are
preventable, ultimately the decision is often based only on price
because it’s the easiest way to measure a partner.
Tools that provide insight into how shippers and suppliers
perform against the market as well as determining if prices are
truly competitive are needed increasingly as competition in a
changing environment redefines shipper and supplier
relationships.

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