High Tech Disruption in the Freight Forwarding Sector

New high-tech outliers are adding to the complexity of todays' freight forwarding industry by nurturing a workforce eager to embrace disruptive new concepts and strategies.

“The expanding definition of a freight forwarder can be attributed to the changes our industry has witnessed in the past five to 10 years,” says Eytan Buchman, marketing director for Freightos, a logistics technology company that's automating online freight sales. “Margins are being squeezed while forwarders are facing increasing costs. In addition, shipper expectations are expanding. Meanwhile, forwarders are trying to stay in the black while providing outstanding service.”

Wiebe Helder, CEO and co-founder of Cargobase, an online, ad hoc freight platform based in Singapore, says that most freight forwarders are stuck to old-school processes and technologies. “We're seeing shorter product life-cycles, more just-in-time manufacturing and products getting more complex,” he says. “This means dealing with a more volatile supply chain. Planning becomes more difficult and companies are buying more freight ad hoc—freight that's growing to a $350 billion market.”

Helder admits that ad hoc is expensive and difficult to manage, however margins are 40% to 50%. This fact may explain why Flexport, a new forwarder, has entered the fray. Flexport has raised $26.9 million from investors including Google Ventures, and has announced its intention of becoming the “Uber” of ocean carriage.

“We offer a web-based dashboard that let's a U.S. importer comparison shop by typing in variables—Port A on this day or Port B on this one, railcar versus tractor-trailer—and displays price quotes from transport companies,” says Ryan Petersen, the start-up's CEO and founder.

But now that Amazon has entered the freight forwarding space—and with Alibaba and Google set to pounce—will we see all the old ways of doing business fall off the wayside?

Brandon Fried, president and CEO of the Airforwarders Association, doesn't think so. While he acknowledges that freight forwarders are already facing a difficult market thanks to overcapacity, declining rates and a global economy that has remained in the doldrums for several years, the verities of sound management still matter.

“The conclusions drawn by the A.T. Kearney study confirm what we've believed all along,” says Fried. “The freight forwarding business, when properly managed using a combination of skill, productive systems and knowledgeable people working to solve complex logistical challenges, can indeed produce meaningful profits for industry stakeholders and shippers alike.”

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