More revenue doesn’t mean more profit

The logistics industry has been under the limelight for quite some time now, and the ripple effects of the pandemic and Russia’s invasion of Ukraine are being felt around the world. Supply chains have been impacted greatly, by these events, not to mention rising inflation which is causing many employees in the transportation industry to go on strike.

Why is it that during these periods, where demand is high but supply is choked, the smaller players who run logistics businesses don’t see more profits? 

It’s rather odd. The smaller and medium-sized players have been busier than ever, with some achieving higher and higher revenue but not making more profit at the end of the day.

After speaking to a few carriers, we have found that centralized logistic providers like Amazon, DHL, Walmart, etc have been contracting the medium and smaller players to carry out work. But the work is carried out completely on the centralized player’s terms, and pricing and other sensitive data are being gobbled up by the centralized players who are then using this data to create a moat around their business, which is stopping the smaller and medium players from getting any real market share. 

The logistics industry has become more challenging than ever when it comes to increasing profitability. This industry faces multiple challenges, including handling bulk work in a short timeframe, adjusting work processes, adapting to technological changes to enhance profitability, and planning for the future, to name a few.

However, businesses keep analyzing their processes from time to time to improve their work and achieve more at in to reduce costs. The most challenging part is meeting the fixed costs and maintaining the status quo. These are the two major factors that take a toll on the company’s potential savings.

Fortunately, there are several concrete measures for driving profitability and improving the chances of success in the logistics business, but the most important is identifying the logistics needs of your target audience and working accordingly.

Lead qualification is an essential step in maximizing sales conversions and involves prioritizing, selecting, and reviewing leads that are most appropriate for business growth. The most effective way to identify qualifying leads/target audiences is by categorizing them based on their unique logistics needs and requirements.

If something’s not working well for your business, revise it to introduce the necessary changes. Also, you need to have an in-depth understanding of the different ways to meet a wide range of freight requirements. Use your creativity for the ultimate success of your logistics business.

Logistics service providers must understand the flow of shipments while strengthening customer relationships and improving supply chain reliability. Additionally, you should cut-off excess inventory so that it’s easy to find profitable opportunities within your current supply chain without having to go the extra mile to meet your business goals and mission.

A powerful marketing and sales campaign and the use of the right set of tools can multiply your business’s revenue earning capacity. Establish a solid foundation and good brand image in the market for the greater good of your logistics company. Success doesn’t come overnight. The profitability of your business shall increase with consistent efforts towards your goals.

Profitability is enhanced when your business is able to reduce its waste and increase its efficiency. Digitalization solutions like TrustedTrucks provide logistics businesses with streamlined workflows that simplify business processes, make them more efficient and thereby reduce waste.

Register on TrustedTrucks and try our order management workflows today