In a constant evolving world, no business can escape digital transformation, not even a freight forwarder. Many companies in this industry have started to change and there is a promising upgrade around the corner for them. So, are the rest of forwarders going to stay behind or are they going to take on the challenge and move forward?
It has been more than five years since the e-forwarding concept began and was taken seriously. Its evolution can be observed on the many business model shifts by companies in the digital freight forwarding industry and on established forwarders that are setting up their own digital channels. However, digital transformation on this particular business has been slower than others and even a bit confusing, considering that there are now more service options than before and there’s a struggle to determine which are more useful for a freight forwarder.
In recent years, a series of digital forwarders, forwarding marketplaces, and other software providers of this area (whether to arm forwarders with new tools or to help simplify traditional forwarders processes) have emerged and are willing to make a significant change in this industry. In fact, some startups in this area have pivoted and changed their business models to be aligned with trends and market’s needs.
An example of this is Fleet, a startup that started in 2015 as a marketplace (sort of Trivago for freight), where shippers could rate their experience with forwarders, then they could ask for quotes and documentation from a group of forwarders. Now, Fleet announced they were shutting the marketplace to become a digital forwarder like Flexport, IContainers, FreightHub, and Zencargo. With this new model, instead of being the connection between small and mid-size shippers and forwarders, Fleet is basically taking on the role of the forwarder.
Empowering every freight forwarder to be part of digital era.
All of these changes have started to make the industry move forward, but still, there are so many freight forwarders that continue to have manual processes, especially on pricing matters, and don’t know how much profit they can get out of digitalization. This is a tremendous opportunity they might be losing and that may cost them a lot if they don’t take on the challenge.
As founders of Gencomex, a marketplace competing against Fleet for Latam market, we have worked with over than 200 forwarders in different countries, including the top 20 largest companies, and it helped us understand that forwarders need four things:
- Strong technical product.
A freight forwarder usually has the first three but need help with the fourth one. This is where Cargofive comes in, to help them have a strong technical product.
In a Skyscanner, Airbnb and Amazon era, procurement employees are used to transparency and convenience of digital sales all through, and they expect the same at work. A freight forwarder who wants to develop and maintain a competitive advantage must dramatically optimize its processes and improve its customer experience.
Actually there is a growing number of world’s largest forwarders setting up their own digital solutions, for instance:
- Damco with Twill-Logistics.
- Agility with ShipaFreight platform.
- Kuehne Nagel has also been facing the startup digital forwarder challenge by adding its ‘Sea Explorer’ planning tool to its online quote and booking services, and combining their analytics with Logindex’s data.
- Geodis also rolled out an online pricing and booking model for global air and ocean shipment across the world on March. Their platform, called IRIS, allows customers to compare rates from different modes and place shipments in minutes.
Therefore, we can all agree that every freight forwarder must go through digitalization to keep up with this industry’s evolution. At Cargofive, we take this very seriously and want to help forwarders to go through digital transformation in the best way possible, with a strong tool made specially for them. Freight forwarders that want to be part of this digital journey can book a free demo to understand how we can help them to achieve this.