A wave of digital disruption is about to hit sea and air freight forwarders. Startups, suppliers, and even customers are using digital technologies to develop a variety of innovative business models that will dramatically improve the customer experience and eliminate entrenched operational inefficiencies. These digital business models have the potential to overturn the dominant position traditional forwarders have long held in the industry.
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As may be aware, a Freight Forwarder is a multi-function agent/operator who undertakes to handle the movement of goods from point to point on behalf of the cargo owner..
The essence of freight forwarding is to ensure that the cargo is picked up from the seller and delivered to the buyer at the required place, at the right price and in the same condition that it is picked up from origin using the most suitable resources and routing possible..
For the freight forwarder involved, this may include a door to door movement, negotiating freight rates, nominating the carrier(s), booking the goods and handling all the documentary, operational and transportation requirements between the two points..
Who is a digital freight forwarder and how does one become a digital freight forwarder..??
Hint : You can’t just add the word digital..
When you look at companies like Twill, Freighthub, Flexport, etc who term themselves as a “Digital Freight Forwarder“, a common theme emerges, and that is “the ability to offer the services of a freight forwarder but on an instant basis using online technology and data“..
Digital freight forwarders are a new breed of freight forwarders who:
When we speak of competition for a digital freight forwarder, you naturally think that it has to be another freight forwarder right..?? Well, going by what is happening in the market, it need not necessarily be the case..
For example, if you refer to the websites or marketing kits of any of the digital freight forwarders, you may see that some of the services at the top of the list are :
As novel as the above may sound and as much as it sounds like something a freight forwarder would offer, a lot of the shipping lines have been offering online services for a very very long time..
For those who may not be aware, a shipping line is a ship owner, operator, carrier who offers liner or tramp services to carry cargo offered to them by a BCO or a freight forwarder from Point A to Point B in exchange for monetary benefit called Freight..
Customers have been able to:
Shipping lines like Maersk Line, CMA CGM, ZIM Lines (to name a few) have spent a lot of time, effort and money in digitalizing their systems.
These industry giants, have been around for a long long time and have gained countless years of experience in handling all types of cargoes.. Now they are using these experiences and customer feedback to strengthen themselves digitally..
Shipping lines also have consortiums and associations set up to improve their digital presence..
1) Maersk Line teamed up with IBM to create the TradeLens project, which is a blockchain technology in the global supply chain to enable trust between multiple trading partners including carriers, freight forwarders, customs, port authorities and more when transacting in a digitized global trade documentation process with Maersk Line, ZIM Lines and PIL as members currently..
2) A rival to the above grouping consists of CMA CGM, Cosco Shipping (including OOCL), Evergreen Marine, and Yang Ming Line, representing about one-third of total global containership capacity.. This consortium is based on CargoSmart technology, a shipment management software provider owned by Cosco..
3) The latest association is Digital Container Shipping Association founded and supported by MSC, Hapag Lloyd, Maersk Line and ONE with the purpose of driving standardization, digitalization and interoperability in the container shipping industry..
Apart from the consortiums and associations, the lines are also making digital progress themselves..
1) Maersk Line, Hamburg Sud, MSC and CMA CGM (to name a few) all have reefer containers or smart containers fitted with Remote Container Management (RCM) system which provides total visibility to the customer and reduces cost and time spent on container inspection upon arrival.. RCM allows clients to remotely monitor and download crucial data relating to temperature, container location etc.. It can also be used to reduce/neutralise cargo damage and claims in perishable commodities through quick intervention should something go wrong during transit..
2) Zim Lines, which piloted the first paperless Bills-of-Lading based on blockchain technology using selected customers and trades has progressed to the next phase where in it is offering the opportunity for all its customers in selected trades to move to electronic bill of lading..
Zim Lines has also invested in Ladingo, a ground-breaking e-commerce solution..
3) Pacific International Lines (“PIL”), the company founded by one of the Leaders and Visionaries in Shipping – Mr.Chang Yun Chung, successfully used an electronic Bill of Lading (e-BL) built on the IBM Blockchain Platform for the shipment and tracking of Mandarins (a type of Orange) from China to Singapore to coincide with the Lunar New Year celebrations in 2019..
4) CMA CGM launched an entirely digital eco-system called “eSolutions” which integrates eCommerce channels such as Electronic Data Interchanges (EDI) and Application Programming Interfaces (API) allowing the digital transmission of relevant information and data between CMA CGM and its customers..
Using this digital platform CMA CGM’s customers can manage their transport chain from beginning to end from a single access point, and personalize every detail..
Customers can view, create, amend and reuse all shipment information for each quotation, booking, shipping instruction, bill of lading, invoice, notice of arrival & delivery order.. They can also upload all essential shipping documents (Declarations, Letter of Credit, Customs documents, LOI etc..) to reduce lead times during the whole procedure..
eSolutions touted as CMA CGM’s 100% digitized road to market includes functionalities such as :
As you can see, all these services offered by the shipping lines through their eCommerce platforms are eerily similar to the solutions that the digital freight forwarders are offering..
If digitalization was the catalyst for the birth of a”digital freight forwarder“, then considering all these similar digital options offered by a shipping line, should we consider this as the dawn of the “digital shipping line“..??
Apart from the digital shipping lines, digital freight forwarders also will need to know how to contend with traditional freight forwarders, not just from a service perspective but from a digital perspective..
A while back, there was quite a robust discussion here whether digitalisation could be the beginning of the end of the freight forwarder..
But if companies like Kuehne & Nagel and DSV (strengthened by its recent acquisition of Panalpina) are considered to be these traditional freight forwarders, they will no doubt prove to be thorns on the side of the “digital freight forwarder”.. Especially when they have years and years of hardcore freight forwarding experience..
Kuehne + Nagel for example, recently launched a full container shipment solution called KN Pledge based on which KN offers an online solution with a guaranteed lead time for Full Container Load (FCL) transportation that covers all permutations and combinations from port-to-port and door-to-door..
What this means is that customers who booked using the KN Pledge will not pay freight charges in the event there is a delay to their goods.. How is that for peace of mind to the customer..??
DSV also provides online bookings, track and trace, online quotations, purchase order management and warehouse management to their customers..
Digital Freight Forwarders are up against some formidable competition with traditional freight forwarders and digital shipping lines gnawing at their heels with their experience and technologies..
Today’s article by Muthu Jagannath talks about Value Protect by Maersk and Serenity by CMA CGM which are insurance cover options offered to customers by Maersk and CMA CGM, adding to their basket of integrated services being offered to the customers..
It will be interesting to see how the digital freight forwarders cope once the digital tech becomes mainstream..
Whichever way I see this, the party that gains the most, should be the customer.. They have some of the best options to choose from..
Whether it is the agile, quick, nimble and instant “digital freight forwarder” or the experienced “digital shipping line” or the wise old “traditional freight forwarder” with more than a sprinkling of technology, the customer certainly looks set to enjoy the best of it all..
It will be interesting to see how global trade will be reshaped once all these digital efforts bear fruit in the various orchards..