Logistics Technology Is About More Than Process Automation

Jan 11, 2019 | Industry

There are benefits to using technology that freight forwarders and carriers often overlook.

The common selling points for technology are usually about eliminating manual tasks and cutting down on paperwork. Obviously anything a forwarder can do to eliminate unnecessary phone calls, as one example, can be big time savers. These are all important benefits, especially in a process as paperwork intensive as that of international shipping – but these type of tactical advantages are not the whole story.

Technology provides more significant and strategic benefits, starting with its ability to support better decision making.

For example, the first step in arranging any shipment is deciding on the mode. For international logistics the options are generally FCL, LCL, or Air Freight. All are straightforward enough in what they are, but many shipments fall somewhere near the line between which is really the best option – in terms of cost and transit time. Assuming a shipment of a few pallets is always better shipped LCL and not FCL can be a mistake. Sometimes paying for the whole container, even if there is extra space, can provide cheaper and faster service. In certain parts of the world, the Middle East for example, the economics of air freight often make the mode competitive with ocean cargo options as well. Both these ideas are counter-intuitive to many logistics professionals.

Here’s the point: deciding on the best mode for a shipment is not always clear cut. The inputs and factors that need to be considered are often too great to calculate manually. Technology that helps support faster and correct decision making – like the best shipping mode – provide important value to the shipping process.

There is also the decision of which carrier to choose. Routing is a complicated decision. Finding the best carrier at the best price and service level require too many details to be considered manually. The ability to access all the available rates for a given shipment enable better decision making. Again, supported by modern freight forwarding software and technology, complicated decisions become simple.

Looking further up the supply chain, similar types of routing decisions should also impact choices on where to source products in the first place. The cost of shipping is a big cost component of product sourcing. Smart and accurate decision making, supported by technology, helps to optimize supply chain costs by enabling accurate shipping costs to be factored into sourcing decisions on a global scale.

On a more local basis, supply chain modeling can also help to determine where to store inventory that optimizes transit times to customers from warehouses and distribution centers. This benefit is especially important in the current retail market where consumers demand for fast and cheap delivery is only increasing.

When companies like freight forwarders are considering adding logistics technology it is important consider the less immediate and tactical advantages it can provide. Saving time and eliminating paperwork are important benefits, but it’s also the strategic ways that technology can support decision making up and down the supply chain where technology can provide the best value.

Magaya provides a complete suite of solutions for freight forwarders and shippers that supports the complicated decision making process of determining shipping mode and carrier selection.