Propel Your Revenue: Recent Episodes
Judson Rollins
Propel Your Revenue is an informal, engaging podcast that provides cargo and freight carrier professionals with actionable ideas to increase the revenue generated by their operations.
Through each episode, listeners will be presented with new opportunities to evolve their understanding of commercial aspects in this highly complex and constantly changing industry.
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
- "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]
- "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
Normally, a demand downturn means reducing capacity -- but how do you respond when that downturn occurs during a period of massive operational disruption? The airline industry may offer some clues. Host Judson Rollins looks at how airlines sell capacity in uncertain times, and how to optimize service schedules and pricing in response to disruptions -- in both your own and your competitors' schedules.
What you will learn in this episode:
* 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
Money Quotes
"Canceling scheduled trips later leaves you with unhappy customers who question your reliability, which in turn reduces how much they'll be willing to pay you for future shipments. You're better off letting your competitors sell capacity they can't operate. Wait for their displaced customers to come back to you at the last minute, when their cargo is left on the dock and they're willing to pay you a premium to deliver it on time." "If you sell all your available capacity far in advance, you're probably missing opportunities to grab urgent business close to the departure date. You only have a limited amount of capacity to sell; once it's gone, it's gone!"
"Short-term cancellations are a very blunt instrument for managing capacity. Not only are they hard on your relationships with key contract shippers, they also might not be your most profitable strategy."
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
- "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]
- "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]
- "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
In part two of a wide-ranging discussion, aviation expert Courtney Miller and host Judson Rollins discuss an apparent convergence of air and sea freight, as ocean carriers try join forces with cargo airlines and even build wholly-owned air fleets. They also talk about e-commerce’s impact on air cargo as giants like Amazon, JD.com, and MercadoLibre buy and lease freighter aircraft.
Courtney shares his views on how a global pilot shortage will affect air cargo, and how passenger-to-freighter converted aircraft will compete with new-build freighters. The two also discuss how geopolitical changes, food shortages, a scaling-back of globalization, and other factors will impact the freight industry over the coming decade.
What You Will Learn In This Episode
- Why ocean carriers are pushing into air transport, and its implications for shippers
- How e-commerce has impacted express cargo carriers and B2C delivery expectations
- Why Amazon views its air network as its “great defect”
- How capacity purchase agreements are used to manage pilot wages
- The importance of matching human expertise with rich data to maximize profitability
Money Quotes
“Increased volumes do not proportionally lead to increased air traffic in the e-commerce market. The more volume you have, the easier it is to pre-position and utilize more economical modes of transportation like rail and maritime.” [10:25 - 10:49]
“You really need to leverage people, the knowledge that is within your organization. Use the specific experience and knowledge that exists around the industry. Your edge comes from the knowledge of your people.” [27:54 - 28:15]
Courtney Miller, a wide-ranging expert in commercial aviation, appears on Propel Your Revenue to discuss the present and future of air cargo. He currently holds two positions: managing director of analysis for aviation outlet The Air Current and founder of Visual Approach, a provider of aviation analytics and consulting.
Air cargo volumes have stayed strong in the Western Hemisphere, but capacity is rapidly returning as passenger flights add lower-deck “belly” capacity. In his recent analysis for The Air Current, Courtney found that volumes are increasingly high because air cargo has become a release valve for sea transport. Some shippers and forwarders view air transport as go-to reserve capacity; Courtney explains why this is unsustainable in the long run.
What You Will Learn in This Episode
- How consumers’ shift from spending on services to goods impacted air cargo
- Why demand for goods is now trending down
- How air cargo acts as a relief valve for excess ocean container demand
- Key macroeconomic drivers for air cargo
- The nexus between interest rates and air cargo demand
- The many ways air capacity is priced and sold (weight, volume, pallet positions, etc.)
Money Quotes
[22:26 - 22:43] “One of the big drivers of air cargo demand has been interest rates because the higher interest rates are, the more expensive working capital is. The more working capital you've got tied up in inventory, the quicker you want to get that inventory delivered to the buyer so you can get it off your balance sheet.”
[31:17 - 31:32] “There is no single standard even within air cargo for how we think about cubic volume vs. dimensional volume vs. physical weight. It's an open question that nobody's really working toward resolving, but it's something that carriers that are thinking about their commercial strategy have to settle.”
Cargo and freight carriers have long focused on minimizing cost to achieve profitability. Too many go down the dangerous path of cutting costs to the detriment of service reliability and shipper satisfaction. Such behavior reinforces perceptions of shipping as a commodity business without differentiation – or pricing power.
In today’s episode, host Judson Rollins points out a better path to higher margins: work to boost your unit revenue just one percent, which is more achievable and sustainable than most cost-cutting methods. As your profitability grows, you can invest in even more revenue generation strategies, driving a virtuous circle leading to long-term financial viability and success.
What You Will Learn in This Episode
- Why cost cutting is not the best means to increase profitability
- Why passenger airlines are a relevant example for cargo/freight carriers
- How to differentiate your service levels to capture more revenue from each shipper
- Why you should implement time-definite delivery options as well as deferred shipment options
- Ideas for building a portfolio of value-added optional service features
Money Quotes
- “In today’s chaotic supply chain environment, reliability is highly valuable and will allow you to charge a premium.”
- “Start identifying new service features by conducting a ‘mystery shop’ with a couple of your forwarders.”
David O. King, a senior advisor and specialist in supply chain revenue optimization, joins Propel Your Revenue host Judson Rollins to talk about how air and ocean cargo carriers maximize revenue, and untapped opportunities in the space. A 20+ year veteran of both air and ocean carriers, David brings a unique multimodal perspective as well as knowledge of how carriers are expanding their revenue streams beyond mere transportation.
David and Judson talk about lessons learned from the pandemic and resulting supply chain chaos, and where forward-thinking carriers are moving to stay ahead of a looming decline in shipping demand. David touches on how this will affect long-term agreements between carriers and customers, and how carriers can retain customer relationships by mitigating shipping reliability risks and providing better shipment visibility.
Throughout the episode, David highlights the importance of data & carrier-shipper data exchanges. In particular, how can carriers and their customers jointly utilize data to offer the right capacity, improve demand forecasts, and enhance shipment visibility?
He also explains the importance of deep cooperation between carriers and customers. You’ll learn why both sides need to understand each other’s short-term and long-term plans and needs in order to maximize service quality.
What You Will Learn in this Episode
- Why cargo and freight carriers need to innovate their approaches to revenue optimization
- The need for carrier-shipper cooperation to maximize revenue and customer satisfaction
- What cargo carriers and passenger airlines can learn from each other in revenue management principles, data, and technology
- The biggest data and technology gaps cargo carriers face
- How organizational structure affects revenue performance
- Why now is the time to invest in demand forecasting and revenue optimization
- How cargo carriers can nurture and grow customer relationships in a world of shrinking demand
Money Quotes
- Events like the pandemic bring to light the value that different aspects of the business can bring to the overall business. I feel that revenue optimization will no longer be segmented between the cargo side and the passenger side. [3:58-4:15]
- Most of the time, things don’t go as planned. So your ability to respond proactively makes a huge difference to the end customer. [13:50-13:58]
- Carriers that really want to get ahead need to invest in data and systems first and foremost. [15:26-15:38]
- I think there’s going to be much more momentum behind people’s willingness to change, and the adoption of these new technologies that enable driving this value for the customers. [18:07-18:18]
- The relationship side of the business has been the anchor point and continues to play a significant role in how growth and development can be leveraged. [20:48-21:02]
- Removing assumptions is a key component. Understanding what a customer does and doesn’t understand about their data is the first step. [27:10-27:25]
- Understand the value proposition. Don’t discount just to discount; understand the need for a discount. [37:08-37:30]
Resources Mentioned
- Revenue Management: Hard-Core Tactics for Market Domination (book) [https://www.amazon.com/Revenue-Management-Hard-Core-Tactics-Domination/dp/0767900332]
- Engage Me: Strategies from the Sales Effectiveness Source (book) [https://www.amazon.com/Engage-Me-Strategies-Effectiveness-Source/dp/0992077109]
- Council on International Educational Exchange (non-profit organization) [https://www.ciee.org/]
Contact David O. King
- +1 (305) 927 1603
- davidking@dokingadvisory.com
- https://www.linkedin.com/in/davidoking/
It’s Time For a Revenue Revolution!
For much of the past two decades, cargo and freight transport has been characterized by terrible economics. The pandemic brought a huge boost to demand, but also enormous operational disruption. Obviously, the industry’s current model is need of change – and we know the record rates of the past two years won’t last forever.
Through this lens, host Judson Rollins shares how forty years of innovation from the passenger airline industry can be applied to air, sea, road, and rail carriers today. He identifies key short- and intermediate-term opportunities for revenue improvement and how leading carriers like Maersk are already pointing the way to commercial modernization.
What You Will Learn in This Episode
- Why your freight transport business needs to change immediately
- The benefits of maximizing your revenue per customer and capacity unit
- How to leverage customer-focused pricing to maximize profitability and customer satisfaction
- Why you should start selling value-added services alongside basic transport
- How innovative carriers are pushing the envelope in service offerings and customer segmentation
Money Quotes
- “Tech-enabled freight brokers like Convoy and Arrive Logistics … can maximize your fleet utilization … but at rock-bottom yields as drivers compete in a reverse auction.” [2:56 - 3:27]
- “Having short-term availability and reliable on-time performance are advantages for which shippers will pay a premium!” [5:17 - 5:23 ]