consultants. While the language in each differs, the message to the respective sales forces is the same: Convince the
customer that it could secure a superior value proposition—
and sometimes a better price—without the need for outside
consultants to negotiate for them.
The FedEx edict rules out “direct engagement with consult-
ants” if it is deemed that the relationship’s sole value is “price
negotiation.” The company said it will “negotiate business
relationships directly and exclusively with our customers, not
through a third-party consultant.”
The document advises the company’s sales force to empha-
size that working directly with FedEx ensures “confidentiality”
for both the company and the customer. By contrast, “working
with a third party allows information to be shared that may be
proprietary,” according to the document.
The UPS document urges its sales force to advise customers
that working with consultants could rob the customer of even
greater savings obtainable by directly negotiating with UPS.
“UPS will not provide lower rates simply because a [consul-tant] is involved,” according to the company’s policy.
Pitt-Ohio launches
small-parcel service
Uncertain future
At this time, it is unclear what impact, if any, the legal wrangling
or company edicts have had on shipper behavior. In an action
separate from the AFMS suit, Levetown & Jenkins LLP, a law firm
in Washington, D.C., has begun seeking shippers who might be
affected by the reduced role of consultants in an effort to certify
enough members for a class-action suit against FedEx and UPS.
Meanwhile, the consultant industry—which consists of about
50 companies of varying sizes—is attempting to assess the poten-
tial fallout. Writing in the October issue of a parcel industry trade
journal, Rob Martinez, president and CEO of consultancy
Shipware Systems Corp., said some consultants are “scrambling
to change their engagement approach,” and several have “moved
on to specialize in services unrelated to price negotiation.”
Consultants differ in their strategies, with some negotiating
with the carriers on behalf of their clients, and others prefer-
ring to consult in the background and let the customers nego-
tiate on their own. Some consultants charge a flat fee for their
services, while others accept a percentage of any negotiated
savings and share it with the shipper.
The consensus is that a knowledgeable consultant—many
are former high-level executives at FedEx, UPS, and DHL
Express—equipped with robust information technology
should save a shipper at least 10 percent a year on its parcel
spending by identifying areas of potential overspending as
well as opportunities to strike better deals for the traffic it tenders. In its suit, AFMS said that from 2007 to 2009, it
unearthed $100 million in savings for customers on their parcel spending. In the past five years, consultants have saved
their customers about $1 billion in spending, according to
consultant industry estimates. ;
—Mark Solomon
Regional less-than-truckload (LTL) and truckload carrier Pitt-Ohio Express has launched a small-package
service within its 14-state territory, an unusual expansion for a company specializing in LTL and truckload
services.
The product, called Pitt-Ohio Ground, is mostly
being marketed to Pitt-Ohio’s existing customer base
or to shippers who’ve
done business with Pitt-Ohio before, according
to Kent Szalla, general
manager of the company’s ground division.
Begun in January, the
service currently has
about 60 customers,
most of whom need to ship 30 or more packages a
day to obtain rates similar to those offered by the
major parcel carriers, Szalla said.
Szalla said the product is an adjunct to Pitt-Ohio’s
core LTL offerings and gives customers the flexibility to
tap into the parcel service as needed. One of its main
advantages, he said, is the very low claims ratio because
the Pitt-Ohio packages aren’t moving through mechanized conveyors and are therefore less subject to damage. Szalla said that Pitt-Ohio Ground has reported one
claim out of about 4,000 packages handled.
Pitt-Ohio is building the parcel product “piece by
piece,” Szalla said, adding that it represents a “drop in
the bucket” relative to the revenue generated by its
core business. Based in Pittsburgh, privately held Pitt-
Ohio does not disclose its financial results. ;
—M.S.
PHOTO COUR TESY OF PI TT-OHIO
short takes
Barclay Brand Ferdon, a Yale lift
truck dealer in South Plainfield, N.J.,
has painted a Yale lift truck pink in
support of National Breast Cancer
Awareness Month. The pink truck is being displayed
on the company’s front lawn as a way of promoting
various fundraisers for breast cancer research. ...
Damco, the international logistics arm of A.P. Moller-Maersk, has announced that it is absorbing the operations of Maersk Distribution Services Inc. (MDSI), a
warehousing and distribution company operating in
