Freight and logistics companies can benefit from digital technologies just like any other. In the digital age, where customers expect maximum transparency and lightning-quick turnarounds, technology provides the means to improve visibility in forwarding services and greatly reduce the cost and time required to perform routine tasks. Here’s a look at how.
APIs and Integrated Data
Some freight forwarders and their customers have found value over the years in investing in customer portals. These portals provide a way for customers to check the status of their shipments without reaching out every time to their contact at the forwarding company. However, this presents a duplication of effort and adds, rather than reduces, friction in many cases. Customers have their own ERPs and shippers have their own systems, too. Adding a third portal in the middle isn’t efficient. But it does present an opportunity.
Instead, shipping companies and their customers are increasingly investing in the means to share data seamlessly between these disparate systems. In other words, no hopping between ERPs and separate portals required.
Ultimately, tapping the power of APIs would allow freight customers to check inventory levels, place orders, track in-progress shipments and secure space in less-than-full containers, all from the same place. We may also expect it to provide the sort of common marketplace for freight availability that third-party retailers currently enjoy on platforms like Amazon, Alibaba and others.
TransRisk CEO, Craig Fuller, estimates that freight companies across the world have a total of $140 billion in payments stuck in limbo on any given day. This is a major cash flow problem made possible thanks to a handful of largely avoidable causes. Sometimes a company doesn’t receive a bill when they expected to. Sometimes they merely claim they didn’t receive the bill.
When it comes to cash flow, trust between parties and even vehicle maintenance, blockchain represents a vast amount of opportunity for freight forwarders who see its potential. Blockchain is a decentralized ledger that allows data to be recorded and distributed, but not altered. The potential for freight companies is enormous:
- Blockchain could be used as an auditing tool. Timestamps and other mission-critical information can be entered into the ledger at every step of the journey and provide a comprehensive report that companies can study to improve their workflows, time in transit and regulatory compliance.
- Blockchain can be used to draw up smart contracts between partners which automatically move a transaction to the next stage once pre-determined actions are taken or criteria are met.
- Blockchain improves track-and-trace by assigning each shipment a cryptographic identifier. This identification method can help manufacturers, distributors and forwarders eliminate counterfeit products from the supply chain and secure themselves against risk and liability.
As for the cash flow problem? Payments made over blockchain will eliminate third-party verifications, delays and the added expense (usually 7% on top of the cost of services) of sending payments across international borders — a critical consideration for global freight forwarders and especially those with tight profit margins.
Some exceptions can and do rear their heads in the world of freight forwarding — but a great deal of it is straightforward and routine, too. This means there’s a lot of automation tools that could be brought in to save time and labor costs.
A study by Freightos discovered that just 25% of the world’s biggest forwarders use automation to send confirmations via email. Even rarer is the company that uses automation to deliver price quotes instantly, at any time of day. The same study revealed it’s not uncommon for customers to wait as long as 100 hours to receive a quote after making an inquiry.
Cutting down response time through automation is one way freight companies can recover some of the money they may leave on the table.
All of these opportunity areas for freight forwarders stand to change the game for good. As we’ve seen, the development of useful APIs, common marketplaces and blockchain tools requires buy-in from multiple partners. But some of the others are merely wise investments that any company can begin exploring if they want to future-proof themselves in this critical industry.