Consultant Insight: Are FedEx and Freightos a match made in heaven?

[caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] Just when it appeared FedEx was down and out, the company surprised us all with a partnership with Freightos. The relationship, which has two parts, will see FedEx Logistics use Freightos’ WebCargo AcceleRate and WebCargo Air for real-time pricing and online booking of multimodal and air shipments. In addition, FedEx will become Freightos’ recommended provider of customs brokerage services on its Freightos.com marketplace for all shipments into the U.S. FedEx Logistics is an interesting group and, at the time of its reorganization in 2018, a rather eclectic one. The group includes FedEx Custom Critical, FedEx Cross Border, FedEx Supply Chain and FedEx Trade Networks Transport & Brokerage. It also includes warehouse management and reverse logistics services, 3D Printing and Repair Center, FedEx Forward Depots, which incorporates Critical Inventory and Service Parts logistics, and the FedEx Packaging Lab. The Freightos announcement is shedding more light on FedEx Logistics’ strategy as the FedEx group embraces emerging and existing technology trends to speed up deliveries and increase its focus on e-commerce and small- to medium-sized business. Indeed, FedEx will join other freight forwarders, such as DSV Panalpina and Nippon Express, to utilize airfreight rates and manage such bookings with forwarders on a global basis. In years past, CEO Fred Smith described how FedEx Express incorporated freight forwarders into its strategy, with more profitable cargo placed on FedEx Express planes while forwarders managed the less profitable cargo for FedEx. Freightos’ WebCargo platform will help streamline this entire process and could mean more customers, not only for FedEx but also Freightos — particularly for cross-border e-commerce parcels. Still, it is perhaps FedEx’s incorporation of its customs brokerage service into the Freightos.com marketplace that was the real eye-opener, and it received widespread approval from the shipping and analyst community. The complexities of global trade have sparked a number of recent acquisitions of customs brokerage firms. SEKO Logistics, for example, acquired Goodship International in early 2019. GoodShip International is a customs brokerage and compliance agency that provides customs brokerage compliance, air and ocean freight solutions with an emphasis on Trans-Pacific Eastbound cargo movements. Also in early 2019, Maersk acquired Vadegrift as part of its strategy to expand beyond its ocean freight capabilities. Based in Clark, N.J., Vandegrift’s core business is customs brokerage. However, the company also specializes in trade compliance with a team of former U.S. Customs and Border Protection (CBP) officials, as well as individuals with backgrounds in customs brokerage, retail and law. Amazon also snapped up a customs broker — technology startup INLT — with the goal of helping merchants on its online marketplace more easily import goods into the U.S. INLT develops cloud-based software for sellers to manage costs and customs clearance of cross-border shipments. Freightos has no need for such an acquisition with its relationship with FedEx. At one time, FedEx was considered the largest customs brokerage firm by number of transactions in the U.S., thanks to its acquisitions of Tower Group International in 2000 and certain customs clearance operations of Fritz Cos. Inc. in four U.S. locations in 2002. Today, FedEx Logistics describes itself as “one of the leading providers of customs brokerage in North America,” stating that it “connects 95% of the world’s gross domestic product and handles more than 7 million transactions annually.” Freightos’ 150,000-plus registered importers and exporters will certainly benefit from FedEx’s customs brokerage expertise whether they are shipping via air or ocean into and out of the U.S. Could this customs brokerage relationship be extended globally? Although I neglected to put forward this question to Freightos CEO Zvi Schreiber when we chatted about FedEx and Freightos earlier this week, I imagine Freightos would not want to put all their eggs into one basket, and instead partner with other customs brokerage providers based on geographic region. Regardless, the benefits are great for Freightos and FedEx and should generate more volumes and hopefully profits for both companies. As an afterthought, you may be wondering about UPS’ freight forwarding group. It would not be surprising if it responds to this partnership with a similar partnership or perhaps its own platform. In fact, it’s time for both small parcel providers to connect all their services into one online platform.

Consultant Insight: Are FedEx and Freightos a match made in heaven?

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