"I am an optimist," declares Metzler, who says he firmly believes the transportation and logistics market will be healthier a year form now. The question is, how will we get there, and how choppy and rocky will the road to recover be.
At the moment, clearly there is too much supply for the demand out there, which is a complete reversal of the situation the industry found itself in back in 2006. Some analysts feel that things could be leveled out somewhat if 5 percent or more of capacity could be eliminated, Metzler notes, and he says he's inclined to agree with them.
Shippers have reacted two ways to today's reality. Some are purely opportunistic and find themselves jumping around from carrier to carrier as more attractive pricing is thrown at them. Others are more methodical. These, Metzler says, remind themselves that, "I need to be mindful of switching costs, I need to be mindful of total costs, I need to be mindful of service." These are the ones, he says, who value existing, strong relationships with carriers.
The C-level continues to talk about wringing costs out, but the prudent manager is innovative and creative in the way he or she proceeds. They combine good benchmarking with best practice and "don't just react to the last offer that came across their desk."
This is vitally important to the small and mid-sized shippers, especially the ones in consumables with business valued between $50m and $2.5bn. They have limited ability to invest in people, process and technology. Four percent to 10 percent of their total sales are tied up in transportation and logistics, Metzler says. "They can't just stroke a check for a $1m TMS."
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