Logistics service providers aren’t experiencing their best times at the moment. There is a downsizing trend in most markets, lanes, and modes. The increased number of logistics professionals seeking jobs on LinkedIn suggests that company owners and stakeholders may be looking for someone to blame for this downturn. Is this hunt a good or bad option? We leave it to each company to decide based on their unique situations. In this article, we present another option that can help organizations minimize the impact of market downturns in the future. Below, you will find essential tips and advice to help your organization mitigate future market risks and scale operations more efficiently.

Every Customer Counts

During prosperous times, there is a notable risk of overlooking customers that yield lower profit margins. While certain sales consultants advocate exclusively focusing on the most profitable customers, we hold a different perspective. For logistics providers, cultivating a diverse customer base spanning various verticals proves to be a superior option, offering enhanced risk mitigation. We want to ensure that we do not endorse indiscriminately working with any vertical and customer. Instead, careful consideration must be given to selecting the right verticals that fit your business model the best and determining the optimal number with the help of SWOT analysis and thorough market assessments.

Set Up an Alarm System

Identifying the right time to anticipate a slowdown is a pervasive challenge across industries, and logistics is no exception. This challenge lies in comprehending when the music is slowing down and when it is prudent to apply the brakes. That’s why logistics organizations often find themselves procuring excessive transportation means, constructing excessive warehouse space, etc. While making accurate predictions is inherently tricky, there is room for improvement in addressing this issue.

In many #logistics organizations, the decision-making process regarding expansion is made by a narrow team. The other issue is related to the fact that the only decision-making tool usually used is solely a gut feeling—a method known for its inherent limitations. Logistics organizations should consider implementing an alarm system to alert them to potential risks to enhance decision-making accuracy. Such a system should encompass the measurement of financial, economic, and consumer indicators, geopolitical trends, import/export balances, and the likelihood of potential events. These elements would be integrated into a red flags system, providing an early warning mechanism.

Critical to the success of this approach is assembling a team of both internal and external specialists. This collaborative effort ensures a comprehensive and nuanced analysis, significantly improving the reliability and relevance of the results. By adopting such a proactive approach, organizations can substantially reduce the likelihood of making erroneous decisions during periods of uncertainty.

Create a Sales Process

Those who follow us know that we emphasize the absence of a written and lively #salesprocess in many #logisticsorganizations, deeming it a significant oversight. This article aims to correlate this aspect with what organizations forfeit during a market downturn. The underlying premise is that organizations must seek ways to enhance their sales operations’ efficiency (i.e., accomplishing more with the same resources) or economize funds (i.e., cutting costs) when a recession occurs.

In instances where organizations lack vital metrics, such as the cost of an arranged meeting, conversion rates at each sales process step, the lifetime value of customers, the typical duration of the sales process, and identification of areas where employees encounter challenges, formulating an improvement or cost-cutting plan becomes a downing task, potentially leading to misguided decisions.


Diversification is and Will Continue to Be The Key

Data demonstrates that companies with better diversification tend to weather economic crises more resiliently. The logic is straightforward: during a recession, there will always be markets, lanes, or modes that experience growth and decline. For instance, in times of economic downturn, there is an increased shipment of loads such as Less Than Truckload (LTL) or Less Container Load (LCL) because organizations seek ways to enhance cash flow, and smaller batch orders become more sensible due to reduced consumption. A parallel scenario unfolds with a diversified customer base, where specific sectors may experience slower declines or even exhibit growth amid challenging times.

Embrace Agility and Robustness

In recent years, global manufacturing and trading organizations have extensively discussed the significance of agility and robustness. The logistics industry must take heed of these trends. There is a substantial likelihood that the next decade will present numerous challenges, primarily linked to #geopolitics. Emerging trends such as #nearshoring and #friendshoring are gaining momentum. This indicates that logistical landscapes will evolve, requiring logistics companies to adapt to these new trends swiftly.

#Sustainability is another pivotal trend set to reshape logistical operations. As environmental considerations become increasingly central to business practices, logistics companies must proactively incorporate sustainable practices.

Furthermore, the prevalence of war hotspots worldwide leads us to conclude that additional conflicts may escalate. Consequently, logistics organizations that strategically structure their operations to adapt to these changes quickly will emerge as winners.

New business development must be done constantly

Sustaining a steady influx of new customers is imperative for the growth and success of logistics services across various niches, with only a few exceptions. New business development is not a one-time task but an ongoing process that requires dedication, strategic planning, and adaptability. It involves staying attuned to industry trends, understanding customer needs and competitors, and consistently refining approaches to reach and acquire new clients.

Incorporating innovative #marketing strategies, aligning sales with marketing, leveraging technology, and constant employee #training and #coaching are essential components of a robust new business development strategy. In essence, the proactive pursuit of new business opportunities must become ingrained in the organization’s ethos. It is not merely a task to be undertaken sporadically but a fundamental aspect of the business’s DNA; only then can constant results be achieved.

We conclude this article with a quote from Daniel Hannan: “You cannot spend your way out of a recession or borrow your way out of debt. The answer to emerging from a recession is making the right improvement decisions and implementing them at the right time.” These words underscore the importance of strategic decision-making and prompt action in navigating economic challenges. In a climate of uncertainty, making informed and timely improvements is crucial for organizations seeking to overcome the impacts of a recession and chart a course toward sustainable growth.

About the Author:

sales strategy

Thomas Ananjevas is a seasoned supply chain professional with 15 years of experience in purchasing and selling logistics services and building supply chains from the ground up. He founded a consulting, training, and staffing company dedicated to working exclusively with the logistics industry. Tomas specializes in helping logistics companies implement necessary changes to ensure business growth and continuity. You can schedule a conversation with Tomas by clicking here.

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