This episode is the second half of our conversation with Alexander Nowroth, a 16-year shipping industry veteran and sales strategy consultant. 

We explore the complicated relationships between carriers, forwarders, and tech companies in the drive to logistics modernization. From track-and-trace to IoT solutions, the possibilities for innovation seem endless but are choked by data availability and bureaucratic obstacles. Alexander brings a wealth of insight and ideas on accelerating the process.

What You Will Learn In This Episode

• The role shippers play in the adoption of innovative tech platforms
• Why forwarders often have a cynical view of track-and-trace 
• How forwarders can benefit from being more systems- and solutions-oriented
• How control tower solutions have benefited shippers and large carriers like Maersk

Money Quotes

"Why did Flexport or Project 44 [come to market]? Why didn't [DB] Schenker or Kuehne & Nagel create these companies and launch them under a different name? I think it's because [they're] busy ... squeezing out the current business model and dealing with the bureaucracy they have built up over the last few years ... there's an absolute overburden of bureaucracy in most of these large companies. So they literally don't have the time or resources to do that ... Sometimes the non-established, non-conformists have to shake up the tree." [12:25 - 13:12]

"There are startups like ... Arviem, who put a physical device in a container and said, "here's the uncompromisable, uncorrupted way to [track and trace]. If I put physical [technology] into it, the logistics are very difficult, and no one wants to pay for it. Because it's only perceived as a diagnostic tool, not as much a business-critical surgery tool." [15:56 - 16:17]

Mentioned in This Episode

• Alexander's book: https://a.co/d/6ZQJeEY
• Book: "Humanocracy: Creating Organizations as Amazing as the People Inside Them" by Gary Hamel: https://a.co/d/fXlNhtw
• Movie: "Free Solo": https://www.imdb.com/title/tt7775622/
• TPM23: https://events.joc.com/tpm/index.html
• TPMTech DevCon: https://events.joc.com/tpmtech/program/devcon.html
• Lebenswerk Consulting: https://www.lebenswerkconsulting.com/en/
• Alexander's LinkedIn profile: https://www.linkedin.com/in/alexander-nowroth-40300255/

The logistics industry has seen very little innovation in the past 40 years. New data streams, innovative business models, more automated processes -- all of these can drive higher yields and lower costs. Yet embracing innovation is far from the norm. Why? How can we change this?

Alexander Nowroth, an industry veteran and sales strategy consultant, brings a fresh perspective on how carriers and forwarders can escape the status quo. He and host Judson Rollins discuss the factors that make innovation difficult and contrast this with how industry leaders like Maersk forge ahead with more profitable ways of doing business.

What You Will Learn In This Episode

• How carriers and 3PLs can drive innovation internally rather than wait for tech startups to disrupt them
• How "mistake avoidance culture" traps industry insiders in obsolete technologies and processes
• Why Maersk stands out from its peers as an innovator
• Why the global logistics market is so fragmented

Money Quotes 

1. "A lot of 3PLs have made fantastic revenues and profits over the last one to two years ... so now, where did they go from here? [They need] to ask themselves, "what could be additional revenue streams, additional products, that I could develop from an innovative mindset? And number one is "what hidden needs do my key customers have?" ... That's an advantage the carriers and the tech companies don't have yet. Yes, they may hunt for market share, but they don't really have the knowledge about these customer needs and these hidden needs." [4:41 - 5:21]
   
2. "A lot of shippers say, "yes, the front end is nice, we love the tools. But if the freight doesn't get there in time, I don't care about your fancy IT system, I don't care about your fancy apps. But what is your contingency plan if something goes wrong?" I think that's the biggest Achilles [heel] of a lot of these tech firms: the back end ... is very much manually driven. In fact, it's a lot more manually driven than even the established 3PLs." [27:02 - 27:29]

Additional Resources

• Alexander's book: https://a.co/d/6ZQJeEY
• Lebenswerk Consulting: https://www.lebenswerkconsulting.com/en/
• Alexander's LinkedIn profile: https://www.linkedin.com/in/alexander-nowroth-40300255/
• Judson's LinkedIn profile: https://www.linkedin.com/in/judsonrollins

Many industries have moved to digital documents with standardized formats that are easily shared between all stakeholders. However, the logistics world still lags far behind. In this solo episode, host Judson Rollins explains why now is the time for digitization!

What You Will Learn In This Episode

• The current state of digital communication in the shipping world
• The opportunity unlocked by 2024's "maritime single window" requirement
• Why digitization can reduce cost and grow revenue for carriers and forwarders
• How carriers and forwarders can shape the digitization process

Money Quotes

• "[This is] a once-in-a-generation opportunity! And what makes it doubly impactful is that it has the ability both to reduce cost AND increase revenue -- for both carriers and forwarders!" [2:28 - 2:39]
• "Why aren't carriers and large forwarders clamoring for seats at the [TPMTech DevCon] table? For digitization to improve shipper outcomes and/or reduce administrative costs, carriers and forwarders must agree on cross-platform data formats and sharing." [5:05 - 5:18]

In the second half of his conversation with Rudolf Zuvcic, a consultant and educator in pricing and revenue optimization, host Judson Rollins explores concepts that air cargo carriers can pick up from their passenger-carrying brethren. 

Zuvcic talks about the challenges and necessity for modernization to retain employees and keep shippers happy. He also discusses the pros and cons of carriers building end-to-end transport networks.  

What You Will Learn In This Episode

• The role of tech-enabled brokers and rate marketplaces, and how they affect carriers
• How air cargo carriers can modernize their service offering
• Why talent recruiting and retention is more challenging for cargo than other industries
• How carriers can grow their revenue “pie” beyond mere transportation
• IATA’s difficult role as both industry association and solution provider
• Why more carriers should offer time-specific delivery and how to implement it

Money Quotes

“Can airlines do last-mile, first-mile service? Yes, they can. It just means they need to buy trucks and they need to arrange drivers in all the places where they fly to… Does it make sense? For some, in some places, probably yes. Generally? Probably not.” [7:55 - 8:10]

“What surprised me most ideas or challenges described in these 20-year-old books is they are present in the same shape and form today ... We don’t need to reinvent the wheel, or we don’t need to start looking for new approaches or new challenges. A lot of it is there, it’s documented. Just try to find a different way to make it work or improve on it.” [24:55 - 25:26] 

Learn More

Rudolf Zuvcic: https://www.linkedin.com/in/zivcic/

In this first part of a conversation with Rudolf Zuvcic, a consultant and educator in pricing and revenue optimization, host Judson Rollins tackles the commercial challenges of lower-deck or “belly” air cargo. To maximize revenue, forward-thinking carriers must differentiate their service propositions and improve their demand forecasts. 

Rudolf discusses how demand volatility and price elasticity impact the decision to sell capacity in spot agreements versus long-term contracts. The conversation also touches on how carriers must capture and analyze critical data to increase their market knowledge and optimize customer selection.

What You Will Learn In This Episode

• What determines whether a market relies more on spot or contract volume
• The value of displacement cost in determining price and volume commitments
• What non-express carriers can learn from FedEx & UPS
• How carriers and forwarders can collaborate to improve each other’s margins

Money Quotes

“Airlines need to find a balance between how much to sell via allotment versus free-space [agreement]. With the allotment, if you really get the cargo that is promised, it's actually a risk-free business. And one side of ensuring future revenues is to reduce the risk of not getting the cargo. So if I make an agreement that is respected from both sides, I don't need to be worried about pricing up or pricing down. I can just play with the remaining part of my capacity, the free-sale capacity.” [10:31 - 11:09]

“Whether the solution is AI-based or not, you need data to back it up. One of the challenges is to get relevant data… The short-term win would be to get the visibility to understand what the market is, what the rates are, and how they behave.” [21:35 - 22:25]

Learn More

Rudolf Zuvcic: https://www.linkedin.com/in/zivcic/

If you talk with your shippers, you already know there’s money to be made in being reliable and providing greater visibility. But can you turn that into higher margins? In today's episode, host Judson Rollins takes listeners through the "from worst to first" turnaround of the late Continental Airlines, once among the least reliable US airlines but later one of its best.  

Judson dives deep into four fundamentals you should keep in mind when overhauling your operations:

• File Your Flight Plan and Track Your Progress
• Think “Money In,” Not “Money Out”
• Ask Customers the Right Question
• Make Reliability a Reality

Learn what each of these entails in this groundbreaking episode of Propel Your Revenue! 

What You Will Learn In This Episode

• The cornerstones of every successful company strategy: market, financial, product, and people
• The importance of establishing KPIs, analyzing them, and benchmarking them against your competitors
• The danger of excessively cutting costs
• The one question you must ask customers to boost revenue faster than cost
• How to identify an approach that will boost reliability in your operation. 

Money Quotes

“Companies that are headed for disaster try to cut costs, but that can actually sabotage the product, which lowers revenues more because it lowers customers' value perception. Break the doom loop by apologizing for your mistakes and focus on delivering a better product.” [4:59 - 5:19]

“If you ask customers what they want, they will write you a book. If you ask them what they want and what they will pay you extra for, you will get one clean sheet of paper with a small achievable list of requests.” [13:31 - 13:42]

To Learn More

Article: “Right Away and All at Once: How We Saved Continental”
https://hbr.org/1998/09/right-away-and-all-at-Once-how-we-saved-continental

Book: “From Worst to First: Behind the Scenes of Continental’s Remarkable Comeback”
https://www.amazon.com/Worst-First-Continentals-Remarkable-Comeback-ebook/dp/B000SEQUZ2

• Why airline commercial practices are relevant to cargo and freight carriers
• How to sell capacity you might not be able to operate
• Balancing risk vs. reward in selling capacity late in the booking cycle
• Why "selling out means selling short"
• Pros & cons of canceling service close to the departure date
• How to price for your service advantages

How do you maximize revenue when scarcity is the new norm? Harnessing constraints in labor, equipment, and facility capacity is crucial. Host Judson Rollins takes a closer look at how to optimize around resource constraints when planning your capacity, schedule, pricing, and sales strategy. 

Goldratt’s Theory of Constraints, traditionally applied to manufacturing and retail, has become highly relevant to cargo and freight transport. There are five key steps to optimize for resource constraints, driving a continuous cycle of maximizing resource efficiency and revenue generation. 

What you will learn in this episode: 

• How to optimize for resource constraints when planning your capacity, schedule, pricing, and sales strategy
• Goldratt’s five steps: identify, exploit, subordinate, elevate, avoid inertia (and repeat)
• Precision scheduled railroading: a case study in what NOT to do
• Prioritizing short-term network revenue vs. long-term customer revenue when you can't serve everyone
• Identifying your constrained capacity unit and the importance of knowing your unit revenue
• Ensuring every customer relationship is profitable

Money Quotes

1. "Don’t allow inertia to become your new constraint. Elevating your previously constrained resource should make it no longer your tightest constraint. This means something else will in turn become your key constraint, which requires you to adapt your service and schedule all over again."  [4:39-4:58]
2. "Capacity planning has traditionally started with equipment. But now it has to start with labor availability, especially drivers, pilots, and ship crews. Once you know how many planes, trucks, and ships you can actually staff, you can adjust your fleet size to match." [7:30-8:03]
3. "Short-term network revenue versus long-term customer relationship value is a trade-off you have to make. They're the commercial factors that should decide which markets and which customers you prioritize in a capacity-constrained environment. Making trade-offs that maximize revenue require you to know your unit revenue. In other words, revenue per unit of capacity." [9:21-9:43]

Learning Resources

Theory of Constraints Institute: https://www.tocinstitute.org/
"The Goal" by Eliyahu Goldratt
"It's Not Luck" by Eliyahu Goldratt