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Coming up with an Innovative Pricing Model for a Key Customer

Electronic Vertical Management Team

We’re always looking for new and innovative ways to help our customers. That’s why they stay with DB Schenker. For most customer engagements, we provide a quote to move their products in the most expeditious ways – whether land, ocean or air.

 

DB Schenker has been moving freight for one major, global electronics manufacturer since the summer of 2012, but around the time for renewal in 2013, we told them that we were going to recommend a better solution for their ocean business. After a couple of months of research and negotiations with our ocean and ground carriers, we suggested a Cost Plus pricing model.

Under the Cost Plus model, we constantly monitor the prices charged by our ocean and land partners. Generally, we can book ocean passage up to two weeks before the ship leaves the port of origin. If we can find a less expensive rate, we pass that savings on to our customer and charge a fixed DB Schenker management fee on top of that to cover our cost of doing business. In this way, the customer knows we are working hard to find them the lowest rate and best delivery time to suit their needs.

Obviously, this Cost Plus model won’t work for every customer. It works here due to increased ocean carrier competition, allowing us to negotiate better rates. Because of some creative thinking and sharp negotiations utilizing a Dynamic Procurement Strategy – with ocean carriers in particular — we can look forward to more organic growth with this key customer moving forward.

Electronic Vertical Management Team

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