Railway Age, March 1992

Niche or be Niched

Dick Robey (North Shore; Nittany & Bald Eagle) said it best. "Eighty percent of our business today didn't exist when we started operations ten years ago. Our secret? Staying in touch."

Staying in touch means learning what the customer needs, finding ways you can meet that need better than any other supplier, and maintaining a continuing presence so you can exploit new opportunities. It means creating a niche that only you can fill.

Take Robey's experience with Heinz Pet Foods, for example. Heinz has a key distribution center on Robey's line. The center's manager was wedded to the concept of truck transportation.

But Robey kept plugging away, trying to find the niche he could own. And so, when there was a change of key people at Heinz, he was there with ways to help the new team make its mark. This time, the message hit home.

The business is substantial, highly time- sensitive, and highly divertable to truck. But last year Robey's North Shore line sent more than 1,000 boxcars to four national distribution centers, the busiest of which is in Boston -- less than 400 miles away.

Because the Heinz-North Shore-Conrail partnership works so well, Robey expects outbound traffic to be even better in 1992. What's more, Heinz will start using rail for inbound this year -- another first.

Robey was visible, and he was there to ask for the order; he provides a quality service for a fair price; and he switches the customer daily. Above all, he involves the connecting roads. Robey gives Conrail especially high marks on its Heinz participation.

More Niches

Niches exist for single short line hauls, too. Jim Goodwin of the Connecticut Central found one by turning conventional wisdom on its head and going after a two-mile move.

The City of Middletown, Connecticut generates six million gallons of sludge a year, hauling it from the treatment plant to a processing facility just two miles away. But it was less than ecstatic with the 1,500 trucks a year that clogged the roads for the two-mile run.

So the railroad, working with the municipal authorities, the State, and GATX, assembled a two-car tank train. With each car holding 20,000 gallons, each train replaces ten trucks. The train is faster to load and unload, is cleaner, and is less damaging to the environment than the truck caravan.

Then there's the reverse of Robey's move: rail from manufacturer to distant distribution centers. Both the Gettysburg Railroad and the Ontario Midland ship processed fruit to distribution points in Florida and California respectively. Here, too, partnerships with their connecting Class Is were key. Gettysburg's Sloan Cornell worked with CSX's TSDI crew to make his move work. Over at the Ontario Midland, Paul Schafer gives credit to Southern Pacific's aggressive backhaul rates, which helped him win the business.

A Niche of One's Own

In all these cases, the feeder line manager went out and talked to the customers, learning their logistical requirements and using his knowledge of transportation tools to create a niche. How do you know who to see?

To begin with, you have two kinds of companies in your service area: your customers and everybody else. It makes practical sense to start with your customers. You already know what makes them tick, which helps you find a new niche within your present relationship. Besides, you've always got some excuse to call them up or go see them.

"Everybody else" is a little tougher; it means making cold calls. Still, there are ways to separate yourself from the multitude. Start by learning a little about their businesses so you can help them separate themselves from their competition. Say, for example, you have a local company that sells automotive, hydraulic, and specialty oils. You see an article in The Wall Street Journal about a company that makes gasoline out of used motor oil. You call this gasoline maker and find out how his business works.

Then you call your local oil vendor. Tell him you have an idea that can help him solve his customers' used oil disposal dilemma. Invest an hour touring his plant, learning about his customers, competitors and vendors, and chatting up the railroad all the while. Even if your oil vendor doesn't turn out to be an instant prospect for new business, you've taken the first step in building a relationship that can help you exploit an emerging niche.

Offer your services as a transportation expert. Don't forget that most small businessmen, as well as managers of local facilities for larger corporations, have their hands full without worrying about transportation to or from their place. That's why so many managers use what RailTex's Bruce Flohr calls "knee- jerk trucking." It's a no-brainer for the manager: one phone call and his transportation problem goes away.

It's our job as service vendors to use our technical knowhow to benefit customers. Just yesterday, the president of a $25 million (sales) manufacturing company told me he'd never consider using rail. After all, "everybody knows" boxcars can't make it across the country in less than two weeks -- and if they could, he'd be plagued with loss and damage claims. Our man had never even asked his materials management team to look into rail. Why? First, because he "knew" that rail wouldn't meet his performance specifications. Second, there's a cornfield between his plant and the tracks.

As it happens, we left his office with an assignment to bid on traffic from his west coast vendor. Here's how we got this niche to open up for us:

Last summer a member of our train crew spotted a lot of trucks coming and going from a new factory. Following up on his report, we learned what we could about the company and its indus- try from the trade press and contacts at Conrail, CSX, and the CNW. And we added the prospect to our mailing list.

Before making the call we teamed up with a local rail-served warehouse, part of a national company that already does business with our target's key vendors. Once on the call, we were able to show our prospect how the railroad and the warehouse can be his logistical partners in implementing a just-in-time inventory management system across the continent.

Creating your niche assures success in the market place. You identify the problem and design a solution you are uniquely suited to fix. In one stroke, you've defined a market, created a niche, and barred competitive entry into your unique market.

As one wag put it, "niche or be niched."

Return to:

Created July 31, 1995. Send comments to lblanchard@aol.com