As originally published on LinkedIn…
Another merger and more bad news for shipping customers. In a previous post I wrote about five ways mergers cost businesses. In it I cited mergers in banks and airlines, but seriously, regardless of the industry, has any merger benefited customers more than shareholders?
The recent Unishippers and Worldwide Express merger will be no different. The spin will declare it will help lower rates and improve service. Really? That spin may work to keep the sales folk around long enough to bridge the transition.
But eventually the reality will settle in. The experienced reps who value their customers will get frustrated by the internal bureaucracy that puts process over customers. They’ll leave. So will many of the well paid CSRs. New hires fresh-out-of-college will replace them and take over handling your delicate supply chain operations.
Now, I’m not opposed in principle to two companies merging. They have that right and to the extent that they hope it will improve their situations, well, hopefully they can work it out. Experience however suggests it won’t and that leaves the customer behind with nothing more than a few hopeful claims and higher costs.
Most mergers claim two benefits for their customers: lower rates and better customer service. For logistics companies, these two claims face serious challenges.
First, freight rates vary based on a number of factors. Supply and demand, oil costs and the economy are a few. All of these fall outside the control of any company no matter how big. And let’s be honest, if the economy declines, who gets first consideration, customers or shareholders?
As for customer service…one purpose of a merger lies in the companies’ goals to streamline their process. This may (and I stress may) improve the technology available to customers. A lot of times it also automates the process – and that means auto-attendant hell.
How the Unishippers – Worldwide Express Merger Will Hurt Customers
It starts with customer service. While the plan may be to improve response, the real result for every customer is less options. The personal creativity and flexibility a franchise owner for either of these logistics firms could offer gets replaced by process.
Legitimate customer questions about their freight in transit gets replaced by a TMS that spits back data but few answers. The customer’s entire supply chain operation now rests in the hands of computer and a CSR with no personal connection. The lack of personal attention represents only one part.
You see, customer service goes beyond answering phones, answering questions and following a sales or service process. It involves understanding the customer’s business and situational need. This comes from experience. This experience also enables a CSR to spot opportunities to cut costs.
Too many businesses that need to ship focus on freight rates. Obsessed with getting the lowest rate, they send an email with all providers CC’d to get the best one. They don’t realize they’re losing an opportunity to create real cost savings. An experienced CSR can identify these.
Where are those cost savings? They hide in alternative ways to ship freight, like partial truckload. They hid in the cost of claims processing. Even small adjustments to the supply chain can create big savings.
Customers lose when mergers lead to more automated, less personal and less experienced customer service. Of course, customers aren’t the only ones who lose with a merger.
How Mergers Hurt Owners-Franchisees
Owners and franchisees lose too. They will have to sell back to the new Unishippers and Worldwide Express. Sure, they’ll get their big checks. They’ll also get that big 36% tax hit and the reality that they’re now an employee and not a business owner.
Suddenly, those that wanted to own a business need to start over. And that doesn’t even begin to discuss the loss of the lifestyle benefits that come from owning your own business…
Who Benefits from Mergers
Small operators who truly provide best in class service really get the biggest benefits from mergers like this. Many shippers recognize the value and savings that comes from the expertise of these brokers and small operators who know their customers by name. Plus, many shippers like how they can reach and do business with a fellow business owner.
The Most Reliable Way to Save Money on Shipping
In the world of freight and logistics, experience is priceless. CSRs with years of real world experience know how to save money on freight rates and more importantly how to find savings from the harder to spot indirect costs that bleed a company slowly.
The personal touch is also priceless. The broker who answers the phone on the 2nd or 3rd ring (with no auto-attendant!) and replies to emails fast alleviates a lot of stress and headaches. They also solve problems quicker as they understand the industry and your business. My team and I at LTL Freight Center understand this which is why we put customer service first.
So the next time you hear about a merger, ignore the spin. They’ll tell you all about customer service and new processes. Instead, ask about their personal touch.
And as for the promises of lower rates, isn’t that what they all say?