How to Develop a Great Pricing Strategy as Freight Forwarder

The role of the Pricing area in a forwarder company is often underestimated, and deals are not closed due to pricing related problems, or that’s the blame it takes. However, this conception is far from the truth, and I believe that pricing starts from the Sales area, and not from the Pricing department itself.

First of all, it is essential to know the customer well. Let’s assume we have a shipper that exports raw materials. Sales must provide all the info and insights in order for Pricing to give the best quote possible. How can we achieve this? Let’s see below.

But before diving in, let’s define the pricing person. This is someone who must take care of getting the best purchase prices from the shipping company, know the services, routes, transit times (TT), etc. This will serve to be the link between the demands of their salespeople and the shipping company, thus being able to close that deal. They must not only know the prices but also the needs of their customers.

Spending days on quotes

My point is that it’s not enough for the salesperson to just ask for prices from Barcelona to Shanghai; can it go with a transshipment if the freight is more competitive? Can it go through several ports? Can it take a train? Do you know if the TT matters? When loading to see the cut-offs of the shipping companies, etc.

With that in mind, here are some tips that will allow you to better analyze your traffic to ultimately achieve good freight rates:

The shipping company must be your best friend.

This might seem obvious, but if we delve deeper, we need to understand that the shipping company’s salesperson should be your close friend in this sector; you must know them perfectly. Have you ever asked them what their goals are? What trade do they need to develop? Where are they stronger or weaker? What traffic would they like to achieve?

With these questions, we can help them develop and achieve their goals; hence, they will fight for you to get those freight rates. Surely they will empathize if you take care of them and then they will take care of you.

Involving the Operations team is important too.

Often, the price is not everything; the shipping company’s operations must work well because while it’s true that price is important, what happens during the course of the shipment is even more so. If there’s an incident, the shipping company must help you. So, find out if the shipping company you are going to work with has the service you are looking for, because sometimes the cheaper option ends up being the more expensive, and perhaps it’s better to have less profit but offer a guaranteed good service.

You must ask the Shipper. What does he want?

We must never stop asking the shipper for information. I know it’s not easy; they often don’t answer or are not open to sharing information, but you must make them know that information is relevant to the deal, you can work much better and once you achieve it, show it to them. But the important point here is to know: What do they want, How do they want it, When do they want it, Why do they want it that way? If they are open to alternatives, etc.

With this information, the pricing team can work better and see different alternatives.

Information is power.

Related to the previous point, we can say that information is power. Let’s give some examples. If we know that the shipper is open to alternatives and going beyond what they’ve always done, we can offer them other services. Let’s say they’ve always shipped the goods by truck, but would they be willing to load on a train and take the container out through another port?

In another case, many companies are concerned about sustainability policies, and shipping companies are offering products to reduce CO2 emissions. Why not offer it to the shipper and thus add value?

Use competitive tools.

Having a good ERP can change your entire work methodology, allowing you to organize departments and work together in one place.

How does Cargofive enter the picture? The pricing team can search and find, maritime freight rates in real time, enhancing quote creation, instantly. We know that fast quoting can allow you to win a deal, and more than often, the first forwarder that delivers the quote, wins.

I hope you found a little bit of wisdom in my words, after more than twelve years working within the commercial and sales area of the logistics and supply chain industry, I’ve found that often the most important things are left behind.

For further information on how to develop a successful pricing strategy, don’t hesitate to reach out! More info here

Tarek Sardar KussayerHead of Revenue