SUPPLY AND DEMAND 1
Global Logistics Interview: Supply and Demand
Laynie Gottsch
School of Business, Liberty University
Author Note
Laynie Gottsch
I have no known conflict of interest to disclose.
Correspondence concerning this article should be addressed to Laynie Gottsch.
Email: lgottsch@liberty.edu
SUPPLY AND DEMAND 2
Global Logistics Interview: Supply and Demand
Supply and demand are the forces that drive and sustain every economy and industry
worldwide. The specific industry this paper will focus on is global logistics, and what supply and
demand looks like within the global logistics scene. Though there are many global logistics
companies in the freight forwarding market, this paper will present an interview from a manager
at a small, family-owned company based out of Tennessee called V. Alexander. The interview
asks six supply- and demand-related questions, and their answers shed insight most specifically
on market conditions for a midsized freight forwarder like V. Alexander.
V. Alexander, an International Freight Forwarder
According to the company’s website, valexander.com, V. Alexander has been a leader in
freight forwarding since the early 1960s (“Home”, n.d.). Freight forwarders are intermediaries
between shippers and the truck, ship, or airline carrying the goods, and they are a pivotal part of
the supply chain (Bowen & Leinback, 2004). With people and technology as a core belief, V.
Alexander believes it is able to stay a leg above the competition by utilizing cutting-edge
technology while simultaneously valuing clients above the capacity of its competitors. V.
Alexander asserts that it may not be the cheapest option for freight forwarding, but it will always
be the best.
While client data may not be secure with some of V. Alexander’s closest competitors, the
company is committed to providing the most secure platform to keep data safe. V. Alexander
offers around-the-clock monitoring that increases security and prevents the breaches that have
been known to crumble other companies. With the right staff to back the technology, the
company is able to scale to meet client needs. The company is regulatorily adept, and its staff are
knowledgeable and, therefore, able to provide service above the industry standard.
SUPPLY AND DEMAND 3
V. Alexander offers any logistical need in the market, including imports, exports, customs
brokerage, and customs compliance. Within imports and exports, the company can help clients
fulfill these needs via air or ocean and will ensure products get to their final location by land
once arriving in the destination country. There are stopgap measures to prevent delays and extra
fees as well as full client visibility on pricing and extra charges.
Although the company has partners worldwide, it is headquartered in Tennessee, and it
has physical offices sprinkled throughout the United States. Any US location can handle all
international logistical needs. With Spanish-speaking staff working alongside English-speakers,
the company can handle almost any need that comes its way.
Interview With Daniel Hallock
Daniel Hallock started working at V. Alexander in 2008 as an intern while he was still
working on his degree in logistics and international business at the University of Tennessee. In
2009, he moved to the company’s Germany office, but returned to Nashville to help with sales
team development. He was promoted to the management team in 2018 and currently serves as
the Head of Business Development and is a member of V. Alexander’s Executive Leadership
team. The following are questions asked and his responses via personal interview regarding how
supply and demand looks in the international logistics market for V. Alexander.
What is the Impact on Your Sales When You Change the Prices of Your Products?
Per an interview performed by Laynie Gottsch with Daniel Hallock (2022), V. Alexander
has a lot of fluidity in pricing. The company has complete autonomy in pricing but must make
strategic moves in pricing to remain competitive. Lower prices attract new business while higher
prices allow for a greater profit margin but may detract new business. Therefore, the company
must find a balance that gives them the greatest profits.
SUPPLY AND DEMAND 4
As a service provider, V. Alexander’s prices are highly market driven. If V. Alexander’s
prices are changing, the market and industry is probably changing along with the company.
Customers receive price changes fairly well as long as they are done in a timely manner that
appropriately mimics the market. Another consideration that Daniel must be cognizant of is
ensuring the sales staff is not over-inflating margins in a way that makes it too obvious to
customers. V. Alexander is always measured against its competition and there is a lot of
competition in the international logistics market, so the market really determines where the
company can fall within profit margins.
A service-provider mentality encourages companies to lean on market price averages to
be competitive. Therefore, if V. Alexander is charging above market averages, the company must
get creative with differentiation. V. Alexander is very good at finding ways to add value if the
sales team feels their pricing is a bit off. In order to charge for added value, it is important that
they take the focus away from transactional and commodity experiences. They must emphasize
that services like freight forwarding are not something that can simply be manufactured
elsewhere for cheaper.
How and When Does V. Alexander Change its Prices?
V. Alexander changes its prices with market fluctuations, which are almost entirely tied to
transportation because the movement of items has a direct cost associated with it. Take fuel for
truckers, for example. When fuel prices rise, the cost to the truckers is passed on to V. Alexander,
which then passes it on to customers to ensure the company is still operating within desired profit
margins.
Another sector of V. Alexander’s business is fee-based income, which is less so driven by
market prices. Instead, it is tied to complexity of services received. That is a fee that will last for
SUPPLY AND DEMAND 5
years or until the company deems it appropriate to review and implement price increases. An
example of this type of fee would be scope of work, like technological improvements. If V.
Alexander makes investments in tracking or data analytics that the customer also benefits from,
then there needs to be a discussion on whether to add more fees to each client profile receiving
these benefits. If the company does not charge for these services, the potential danger is that
customers will perceive these services to be free when they are not. Technological advancements
come at a cost even though they are not direct services in international logistics.
Finally, sometimes price increases apply only to specific markets. It must be understood
that people cost money, and people are what makes V. Alexander a successful company.
Therefore, if one person costs more than another (typically in terms of salary), then their files are
going to be more expensive to compensate. The company cannot afford to charge the same rates
to all customers when the sales and logistical teams vary.
What Would You Identify as the Primary Demand Shifters in Global Logistics?
Costs would be the primary demand shifter for international logistics. The supply chain is
a revolving ring in that a company is buying a product from overseas, the company has people
managing price per unit, and is buying based on what consumers want. The price of goods from a
consumer perspective will drive demand for that good.
Specifically in the last couple years, it has been interesting to watch as the cost of freight-
related expenses have increased five- to seven-fold while demand remained constant. Companies
who were importing a full container of material into Nashville, for example, had been paying
$5,000, but were suddenly paying $28,000 for the same good and still could not get enough of it
to meet the demand. Now, the market has cooled significantly because it seems as though
everyone did their buying early, causing an artificial spike in demand. This is likely because
SUPPLY AND DEMAND 6
companies anticipated that the delays in the supply chain would persist, so they over-purchased.
Because of this, they now have more inventory than they can sell, so they are importing
significantly less.
Economies will also impact demand. When groceries, gas or other necessities cost more,
people are buying fewer goods. Companies like V. Alexander also must consider the impact of
economic uncertainty on demand. In times of uncertainty, the mindset transitions to “we should
hold on to cash because we do not know what is coming next.”
Finally, origin of supply will also impact demand. Due to excessive uncertainty in China,
many companies are choosing not to source their products from the country. With China out of
consideration, companies must quickly find alternatives. Today, avoiding Chinese imports is
relatively easy because demand is low, but if demand spikes again and companies begin
scrambling to find sources of supply, V. Alexander expects to see an imbalance in supply and
demand.
What Would You Identify as the Primary Supply Shifters in Global Logistics?
V. Alexander’s vendors who offer supply get to dictate the amount of product in the
market. It could be argued that the number of firms of steam ship lines impact supply more than
anything else. Generally speaking, the number of steam ship lines may change without actual
supply changing. However, if new ocean carriers came into the market and added vessel
capacity, then that would certainly have a significant impact on supply.
There are a few other things that shift supply. A lot of ocean carriers are at least partially
government-owned, so they receive government subsidies. In this regard, the government has
some impact on supply. Further, air freight could be a supply substitute, but it is not cost
effective, so it is generally only used in extreme circumstances. Typically, air freight is about 12
SUPPLY AND DEMAND 7
times more expensive than ocean, so most companies would rather wait for ocean freight to
become available.
How Does the Number of Firms in the Logistics Market Dictate the Price You are Able to
Charge?
V. Alexander must stay on par with competition, but it can control the narrative a bit with
differentiation. The company’s sales staff is aggressive – they do not wait for customers to seek
them out. Instead, they are regularly cold-calling companies with import and export levels that fit
within V. Alexander’s capacity. This tends to be midsized companies that fall under the radar of
larger competitors. Such companies are attracted to V. Alexander because it is still small enough
to provide a personal touch and it can be more flexible than larger freight forwarders. A company
that moves 500 shipments with V. Alexander is an incredibly important costumer and will receive
top notch customer service. However, if the same company moved that level of shipments with a
larger freight forwarder, the company would be just an inconsequential speck of dust. V.
Alexander is able to give attention to detail for these companies that other forwarders cannot
give.
Are There Any Price Restrictions Upheld Either by the United States or Foreign Entities in
Global Logistics? If So, What Commodities are Restricted and in What Way?
V. Alexander sees restrictions on imported goods regularly. The most common restriction
on goods V. Alexander sees is from anti-dumping and countervailing duties. These duties protect
certain industries in the US because production of certain items can be done much cheaper in
foreign markets. For example, wooden pencils from China have anti-dumping duties to
incentivize US buyers or companies to source the material locally rather than internationally.
Without anti-dumping, the import duty on $10,000 worth of wooden pencils would be about 5%,
SUPPLY AND DEMAND 8
equating to around $500 for the material. However, when you add on anti-dumping, that
increases the duties to 125%, so buyers are paying way more on anti-dumping duties than on the
material itself.
In his first few years at V. Alexander, Daniel’s sales team was importing Dave Ramsey
Financial Peace University kits. One of the team members thought it would be cool to put a
wooden pencil in the kit without realizing the implications. This took the kit from a 15% duty to
125% simply for trying to make the kit look a bit more appealing. Obviously, this was a learning
lesson for Daniel and his team and a mistake they will not repeat.
Other regulations include things like hazardous products, country of origin, or container
weight. V. Alexander really tries to avoid importing materials like granite countertops because
they weigh out a container well before the container is full, so profit margins are incredibly thin.
Typically, the containers are heavy, and the importers do not want to pay overweight charges, so
it becomes a logistical and liability nightmare.
Comments
It is clear that freight forwarding provides an important bridge connecting nations
together (Xu et al., 2022). Getting a peak into how supply and demand impact the market
through the eyes of Daniel Hallock provided insight that is likely not available in a textbook. The
implications of some things, like adding fancy pencils to imports, can only be truly grasped
through real life experience. V. Alexander is uniquely positioned to provide a service holding
extensive value to midsized importers and exporters in a way that other freight forwarders
cannot.
Further, while V. Alexander has a high degree of autonomy over pricing, what the
company can successfully charge for its service is primarily dictated by market conditions. So,
SUPPLY AND DEMAND 9
the company can change its prices freely, but too much variation from market norms will price V.
Alexander out of the competition. The only time that price variance is widely accepted by
customers is when they see an added value that other firms cannot offer, such as people,
technology, and innovation. These are areas in which V. Alexander is constantly looking to
improve in order to differentiate itself from competitors.
While many factors can shift supply and demand, in a service-driven industry like freight
forwarding, costs and other vendors seem to have the biggest impact. If there is plenty of vessel
space but costs are too high, customers will have to sell more of their imported goods simply to
break even. At some point, importing at higher costs does not make sense unless consumers are
willing to increase prices for the end good. These are all things management at V. Alexander
must carefully consider and reassess regularly.
SUPPLY AND DEMAND 10
References
Bowen, J., & Leinback, T. (2004). Market concentration in the air freight forwarding industry.
Tijdschrift Voor Economische En Sociale Geografie, 95(2), 174-188.
https://doi.org/10.1111/j.0040-747X.2004.t01-1-00299.x
Gottsch, L., & Hallock, D. (2022, December 2). Interview with Daniel Hallock. Personal.
Home. V. Alexander & Co., Inc. (n.d.). Retrieved from https://www.valexander.com/
Xu, L., Shi, J., & Chen, J. (2022). Agency encroachment and information sharing: Cooperation
and competition in freight forwarding market. Maritime Policy and Management, ahead-
of-print, 1-14. https://doi.org/10.1080/03088839.2021.1990428
