Freightos study: Will forwarders and IT ever get along?

What the experiment revealed is that 17 out of 20 forwarders surveyed had an online quote function, though only 15 of the 17 that had quotation forms were functioning at the time. Following the initial quote request, 10 out of the 20 forwarders contacted were able to follow up in person, and just 9 companies were ultimately able to provide a quote.

Schreiber optimistically reiterated that it is not time to give up just yet, and that the industry wake-up call needed to motivate companies has already arrived. In fact, the writing on the wall is quite clear — from Amazon’s foray into the forwarding sphere to carriers offering direct quotes to shippers. “In 2016, there was virtually no improvement, but that does not mean there were not projects happening behind the scenes.”

Schreiber also said that he expects at least two of the forwarders involved in the survey to announce ambitious plans to get their quotes online in the near future, which could dramatically alter the appearance of future surveys. “I’m quite confident that in the next year, or at least within the next two years we will see a significant change,” he added.

As for why forwarders have been reluctant to automate their quoting technology, it used to be the case that forwarders saw digitization as a threat to their business. Schreiber said, however, that this perception is changing, and that now the majority of forwarders see online pricing platforms as an opportunity. “While a few years ago this was a conversation I was having with forwarders, I’m not hearing it these days,” Schreiber said.

Instead, Freightos concluded that forwarders have simply been slow to develop and roll-out new technologies, or are distracted by the prospects of other investments into value-added verticals with higher returns, like warehousing and other 3PL and 4PL services.  Schreiber added, “These business transformation projects aren’t trivial; for a global freight forwarder wanting to automate rates throughout their entire system and put their prices online, this is just something that cannot be completed overnight. But the projects have started.”

The winds are finally changing thoughtout the industry and investment is pouring into back-end digitization. Schreiber said Freightos has ongoing projects with two forwarders that appear on the top-20 list, and near-term plans to announce new projects with additional forwarders. Both Germany-based Hellmann Worldwide Logistics and Japan’s Nippon Express, for example, are at various stages of rolling out a new rate management and auto-quote system powered by Freightos’ AcceleRate system.

Moving forward, it is undeniable that nontraditional forwarders like Amazon and Alibaba will continue to participate and disrupt the forwarding space. Last year, an Amazon subsidiary received its NVOCC license. Earlier this year, Alibaba announced a partnership with Maersk whereby shippers can book space directly through Alibaba. Digitization, in turn, seems imperative to avoid disintermediation.

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