A number of friends have asked recently, “What’s it like, working that side of the street?” That “side of the street” is the non-vessel-operating side after 27 years with vessel operators and nearly 11 years consulting to a variety of clients. Doing what I’m doing, primarily dealing with carriers on contracts, there isn’t a great difference from the consulting I did for several beneficial cargo owners, working primarily on requests for proposals for ocean carriage and logistical services.
I’ve read several articles in industry publications, including Peter Tirschwell’s “Uncommon Carriage” in the Sept. 5 JOC, about how NVOs have taken a larger share of the global market with support from carriers ranging from the fledgling to the very large. Add the equipment and capacity issues of early 2010 and the advances in technology, and I have to agree with their thesis. I just think there’s more to it.
I’ve noticed great change in how carriers market and sell their services, a reflection that nearly 90 percent of the freight they move does so under a service contract. I came into the industry when salespeople flooded customers. They were a bother to some, but represented free lunches and tickets to games to others. Many salespeople were knowledgeable and helpful, acting as an adjunct to the customers’ own traffic department.
To capture business, they had to offer a value proposition: better transit times, more frequent sailings, schedule reliability, container availability and reasonable response time on questions or problems. Sure, price played a part. But a really good sales rep could sell higher rates based on the other factors, and one key ingredient: likability.
I was never a salesman. I came up through the pricing and conference ranks. But as my career progressed, I made joint calls with salespeople to customers.
Later as a senior carrier executive, sales fell under my responsibility together with marketing, pricing and operations. In that role, I made 20 to 30 calls a month to shippers in the U.S. and Canada. I learned a great deal from these encounters, the foremost being what our customers wanted and needed, their hot issues of the day, and what was changing in their world that would impact my company.
But I also learned the salesperson had great influence in who the customer selected to move its freight. There were no service contracts or commitments. Switching carriers was as easy as calling the forwarder. It was the salesperson who had the relationship, and the knowledgeable, helpful and likable ones were successful with customers.
So don’t we have that today? Are today’s salespeople not all of that and more? In the age of texting, tweeting and Blackberrys, today’s salesperson doesn’t have to find a phone booth to call the office after every call. Salespeople used to make five face-to-face calls a day, four days a week, with one day a week in the office for paperwork. They made one call a month on all “A” accounts — in those days, that was any account with more than 10 containers a month.
They knew the customer; the better ones knew the customers’ wives’ names, their kids, where they went to school. Some became friends and socialized. They knew the receptionists by name. In urban areas, their sales territories were relatively small. In rural areas, known as windshield territories, they were on the road three to four days a week.
Today, there are far fewer salespeople working for carriers. With 90 percent of the freight tied up in service contracts, what’s to sell? It’s almost a service call. There are no more once-a-month face-to-face meetings with all “A” accounts. They’ve lost personal connection with the traffic manager.
So what’s the takeaway? With the advent of service contracts, less personal touch exists. The traffic manager — if the position still exists — doesn’t see salespeople. The vice president of supply chain sees them two to four times a year, once just before the service contract is due to be re-signed and three to six months later when the carrier’s performance is reviewed. That’s oversimplified, I know.
So when I read articles about how the NVOs are getting a larger share of the total market, I look at their business model, at the fact there are thousands of them, and it’s no surprise to me. It’s not that they each have the sales force to call on all of those “A” accounts; it’s that over time each of their offices has developed the local relationships, the rapport with that traffic manager. They connect multiple times a month, sometimes a week.
And with the carriers’ change in selling and marketing, combined with the service issues, I understand it. The NVOs now represent a huge piece of the carriers’ 90 percent service contract market. Many have global contracts exceeding 100,000 TEUs, and a few have five to 10 times that amount.
How do I like it on this side of the street? As it’s been during my nearly 40-year career, global trade and those in it still fascinate me.
Gary Ferrulli, a veteran of nearly 40 years in the shipping industry, is director of export carrier relations for non-vessel-operating common carrier Ocean World Lines. He can be contacted at email@example.com. The views expressed here are his own and do not necessarily reflect those of OWL.