As a small player, Knichel Logistics has to be creative to compete. That’s where being an efficient, family-run business can be beneficial.
Exhaust all possibilities
Creativity and being open to new ideas has already helped Knichel Logistics find a solution to a unique problem — a lack of growth in its less than truckload, or LTL, division.
LTL loads are defined as having a billed weight of less than 10,000 lbs, and the determining factor, since it’s a small shipment, is usually price. But Knichel Logistics couldn’t compete on price against larger companies with more volume, thus they were having difficulties securing new opportunities.
Knichel, along with her senior leaders, knew that there was an opportunity to grow this division and that the demand for the service was already there based on the needs of current customers who were already shipping intermodal and full truckload.
“That spoke volumes, that there was a lot more business we could potentially grab. Why aren’t we grabbing it and what do we need to do to grab it?” she says. “We have a huge customer base that we know wanted that service. If we don’t offer the service, they are going to go look somewhere else and then potentially we could lose the other modes that we have with that customer as well,” Knichel says.
The company’s leadership started looking for an answer.
Knichel Logistics was already using a co-broker relationship with several LTL carriers, so it explored becoming an agent. You receive better pricing, but it can make your customer base, which is in their system, vulnerable if you decide to sever the relationship, Knichel says.
Another idea was negotiating directly with the carriers, but it’s a lot of work and, again, the smaller companies don’t have the volume of business to leverage better prices.
When faced with a difficult problem, Knichel says you can’t give up. Keep the dialogue going through constant networking, as well as conversations with consultants, and trust in the advice of the people you surround yourself with.
“There’s a lot of people out there to help and guide you in the right direction,” she says. “Even though we didn’t have to go to a consultant for this, just in general there have been times we bring consultants in on different areas when we feel like we’re at a standstill. What do we do? Where do we go from here?”
Knichel says don’t be afraid to reach out to other people and do the research to find a solution, because there are solutions out there.
A solution for all
The answer to Knichel Logistics’ LTL problem ultimately came from a post on LinkedIn that her team noticed. BlueGrace Logistics, an LTL provider in Tampa, was looking for franchisees. Knichel Logistics was familiar with BlueGrace’s culture and had worked well with the company in the past as a co-broker. Because BlueGrace specialized in LTL, it wasn’t a direct competitor, so the circumstances were ideal.
It took about six months, but Knichel Logistics created a separate company via the franchising agreement called BlueGrace Logistics Pittsburgh North for its LTL division.