So think back to the last few times you booked your travel plans, and then think about how many times those booking actions involved using a web-based system in which you literally talked to zero human beings.
Using Internet-based platforms to book flights, hotels, trains, tickets to shows, and a hundred other things has become so ingrained in our travel procurement process that we often don’t even think anymore about how automated it’s all become.
Now, if you’re a shipper of goods across borders, think about the process you use to move cargo. Is it anywhere near as automated or intuitive? Do you rely on freight forwarders and customs brokers to perform some of these processes, like transportation procurement at origin, or customs clearance?
Most likely, you do. A quarter of shippers use outside providers to manage their global transportation, and three quarters do so for customs brokerage, according to American Shipper’s 2015 Import Benchmark Study released in late August.
New entrants into the forwarding world are not simply providing a new brand using an old model. They are technology-centric companies—software providers, in many cases—that see the current process of shipping freight globally as cumbersome, inefficient, and costly.
“The more people that touch your product, the more costly your supply chain is,” Daniel Acosta, founder of the import/export digital platform Globatom, told me in August.
Acosta was a former sourcing and logistics executive with a Fortune 500 company who saw firsthand how inefficient it was to procure goods and transport them across the globe. He was especially disenchanted with the way his forwarders consolidated poorly at origin, leaving a problem that grew larger with each leg of that cargo’s journey.
“You need to do things the right way from the beginning,” he said. “It’s like packing a car on a trip. When you pack things strategically, you know where things are. When you pack things without that, you don’t know where the kids’ cookies are.”
These platforms are aiming to take some of the mystery out of what it is that freight forwarders have done.
Now, let’s stop right here for a second. For the most part, these new e-forwarding hubs or marketplaces are really designed for the shipper that is infrequent, lacking expertise, or devoid of the budget to hire a global 3PL (or some combination of those factors).
Let’s also be clear that forwarders of all sizes are not simply standing on the sidelines and waiting for this evolution to occur. As we’ve chronicled before, forwarders are developing or buying off-the-shelf technology at a rapid pace, and those that don’t will be surpassed by the existing forwarding community long before these e-forwarding platforms have a chance to do that themselves.
A quick anecdote to support this point: About two years ago, I spoke with a small forwarder (handling about 2,000 TEUs a year) and asked what visibility tools the company used. The owner said, “Well, when a customer needs to know where their container is, we call the carrier.” Eighteen months later, this same forwarder had implemented a state-of-the-art enterprise system and can easily interface with whatever visibility tool it chooses.
This new breed of forwarding service providers is not likely to displace the existing forwarding community any time soon. There are simply too many companies (from the top five global forwarders to the 2,000-TEU-a-year forwarder) providing good-to-great service at foreign origins that some shippers would just rather not deal directly with.
But what these startups are doing is offering new paths to forwarding services across a broader range of shippers. They are targeting the small companies for which global shipping still seems downright mysterious, as well as major shippers that are tired of inefficiencies over which they currently have little control.
And so the danger for the forwarders that don’t adapt is that they miss out on the next crop of shippers entering the global marketplace, but they could also see their current customer base erode as veteran shippers start to turn to e-platforms just as they used to call the airlines or a travel agent to book their airline tickets.
You can still buy airline tickets that way, if you want. I’ve done it from time to time. But it sure feels like an analog way to do something in a very digital world.
This column was published in the October 2015 issue of American Shipper.