The Implications of e-Business Disruptions in Global Freight Forwarding

Innovative technology and e-centered business models are changing the international shipping industry drastically. In their white paper, e-Business in Forwarding – Threats and Opportunities, Drewry Supply Chain Advisors examine the effects of technological advancements in online forwarding on freight forwarders and ocean carriers. They argue that the move to more technology based platforms and tools creates both threats and opportunities in the industry.

Causes
According to Drewry Supply Chain Advisors, the move toward e-commerce in the logistics industry overall is impacting the freight forwarding segment as well. New entrants to the market are beginning to have an impact on established companies who are slow to adapt to the change. Shippers are in search of a flexible supply chain that will offer shorter contracts and on-demand spot rate requests, which is driving the need for automated processes.

Technology is allowing customers to use online forwarding to enjoy a simpler, more flexible, and transparent shipping experience. In a competitive shipping market, where it is difficult to differentiate from other companies, many shippers are looking to increase sales by improving the customer experience through automation. Overcapacity in the market, coupled with volatile freight rates, allow new entrants to get better rates from carriers, especially when compared to those shippers who are not embracing available technological advances like modern freight forwarding software.

Implications
These technological developments for current and new freight forwarders create both threats and opportunities in the market. Most likely, small and medium-sized shippers will move completely to web based forwarding services and online sales platforms, with customer profiling and market segmentation playing a large role. Larger shippers will be able to offer more procurement options and customer insights. All shippers will have better access to information with big data solutions and be able to provide greater transparency to the customer with increased shipment visibility.

API technology will enable shippers to provide automated rates with simple quote applications, schedule information, as well as shipment tracking services. The use of Transport Management Systems (TMS) allows for comprehensive and detailed processes with flexibility to integrate with other partners, creating a faster and more cost-effective supply chain process overall.

Freight forwards, both large and small, will need to reassess their business models to make sure they are optimizing their supply chain and providing customers with the lowest cost possible as well as a decreased impact on the environment. Medium-sized forwarders specifically will need to expand through specialization in order to stay competitive with new entrants.

Advantages
By using online sales platforms, freight forwarders are able to offer more cost-effective solutions to customers with accurate, specific quotes with dynamic pricing. These online sales platforms are being used by both large and medium-sized shippers in order to gain access to spot rates, dashboard tools, and API interfaces. Automated rate solutions include carriers’ tariffs to create a more realistic quote to shippers. International shippers who are able to re-engineer their sales process, are able to give customers a comprehensive package of pricing customized to fit their needs.

The changes bought about by e-commerce will continue to reshape how freight forwarders conduct business as these providers look to cloud-based applications for end-to-end solutions and connectivity. The demand for TMS indicates that this technology will only continue to expand in the industry. Those business who have not adopted it will not be able to compete with those who are utilizing it.