Automation cannot replace forwarder specialization
The forwarding industry is experiencing a significant amount of criticism these days for its apparent failure to jump on the digital transformation bandwagon. As the online ordering craze gives rise to global e-commerce, small- and large-volume shippers wonder if their forwarders can meet the challenges of shipping across borders, making rapid quotes, responding immediately, and enhancing value to help them respond to their increasing customer demand. The definitive answer at this point is that we just don’t know, but given our history, we may be in for real change.
Forwarders come in many different shapes and sizes, with varying levels of expertise and service capabilities. While some offer a generalized service approach, many prefer a more focused tactic, serving a niche addressing the logistical challenges of an industry. For example, some are experts in shipping works of art, others in perishable foods, expensive electronics or armaments, just to name a few. Becoming an expert in one area helps forwarders differentiate themselves in a brutally competitive business, where they become partners to their customers.
This specific industry approach to service has seen success in many other businesses outside of freight forwarding. Take law and accounting as examples. Attorneys usually graduate with law degrees, able to handle most facets of clients’ legal issues, yet they often find success by focusing and becoming experts in fields such as corporate, securities or family law, and then become known as a resource qualified to handle matters unique to that area.
As with forwarders, lawyers and accountants have seen technology disrupt their industries. Many online products are offering do-it-yourself legal document preparation for wills, leases and various boilerplate agreements without the need for help from a lawyer. As April 15 nears, many of us will automate the tax process by preparing our returns online using popular tax preparation software without the help of an accountant.
Despite the automation of the legal and accounting professionals, lawyers and accountants have not become obsolete, and they now use that same technology to complete costly routine tasks and devote more time to sharing expertise and information with clients. Freight forwarders should do the same, investing in the automation of tracking and shipment status updates with shippers while receiving information from carriers, agents and brokers. The forwarder would spend less time handling data and more time sharing expertise and networking to make the customers’ businesses more successful.
The good news for forwarders is the cost of automation is decreasing, making it much less expensive than it was a few years ago. Now, even the smallest service provider with a few employees can quickly get started and begin offering robust, feature-rich software to customers. The enhanced capability will make clients happy and change the nature of the relationship from transaction-based to a genuine partnership that generates loyalty based on expertise instead of cheap pricing.
Technology providers need to realize that forwarders are not only being pressed for costs but for shipment visibility as well. The mission is no longer about getting a box from point A to B but seeing how that freight delivery affects the whole supply chain simultaneously. Automation systems must be able to communicate with one another now through a common messaging standard that promotes such activity. Legacy information systems can no longer be designed to operate within just one company but must connect across many different firms. The information must be easily retrievable, simple to understand and made readily available to all elements of the shipper’s supply chain partners. Often, their very survival depends on this informational flow.
A recent report indicates that only 10 percent of 350 major retailers are making money at e-commerce fulfillment. So, before jumping on the bandwagon, forwarders need to understand their role in this phenomenon better. Many companies using the internet to sell their products know little about the logistics and regulations involved. A prime example is the number of recent fines levied by the FAA against one major retailer for hazardous material violations incurred when transporting goods by air. The forwarder’s role may involve not only tailoring creative service solutions to meet individual customer shipping needs, but also providing the necessary knowledge and skill to help customers avoid such pitfalls.
The online world brings an exciting opportunity to forwarders willing to navigate its uncertainty and invest in technology to automate processes. Nevertheless, even the most advanced shipper knows that people will always bring value through experience, skill and expertise to the most complex logistical challenge. While we cannot accurately forecast the future, expecting forwarders to invest and rise to meet the challenge is a safe bet.
