As air cargo companies from Federal Express down to the smallest forwarders try to extend their services in search of more business, they are increasingly telling shippers that they cannot afford not to upgrade their transport to speedy but expensive air service. Many shippers, however, are starting to question just how much they can save by cutting inventories. In recent interviews and in appearances at air cargo panels, many shippers say they are looking for stronger proof that a strategy that calls for more spending will actually help their bottom lines. For shippers, such skepticism may be the natural result of supply chains that demand greater sophistication in manufacturers' logistics departments. Many of those strategies, of course, depend on moving goods more rapidly.
Shippers say that puts a premium on service.
Foltz says he speaks from experience, having been both a provider and user of third-party logistics. But he concedes many shippers are rarely open about the true logistics demands of their operations. But that doesn't provide clear-cut costs. The debate over the cost and benefits of logistics strategies is taking on increasing importance as shippers and their transport providers prepare for a new generation of logistics contracts. Many of the largest shippers have already wrung what efficiencies they could by consolidating vendors and tightening supply chains.