Digital Opportunities for Freight Forwarding Industry Growth

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.

Informal research conducted by Nordic APIs indicates that trucking and other types of freight are underrepresented compared to other industries in the ProgrammableWeb API Directory — the world’s largest directory of APIs (application programming interfaces). This means there’s a lot of untapped potential. APIs would allow freight forwards to push out operational data automatically and have it populate in whichever ERP platform their customers use — every party would work from a common set of data without having to make an inquiry.

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. Companies will offer cargo space as it becomes available by populating online marketplaces with information from their own systems, and customers will receive quotes and place orders near-instantly.

Blockchain

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. International freight adds another wrinkle — cross-border payments take time and require third parties for verification.

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.
• Blockchain could provide a transparent record of every maintenance action taken on a vehicle involved in freight movement — such as trucks, trailers and jumper bridges, so all parties can know the fleet is within compliance and has been kept in good repair, and when maintenance was last performed.

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.

Automation

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.

One example of the routine involved is determining whether a customer is named on the U.S. government’s Denied Parties list. Checking orders against this list isn’t optional — it’s a matter of compliance and staying within the law. According to FlexPort’s CEO, Ryan Peterson, most companies check this list just once per shipment — it’s a process that includes visiting export.gov, downloading the latest list as an Excel file and manually searching for the customer’s name. Instead of checking requested shipments against this list just once, FlexPort queries the list every hour using an automated algorithm. It saves time and provides greater peace of mind.

There are other opportunities for automation to step into the freight forwarding business, too. Here’s another:

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.

Guest blogger – Megan Ray Nichols

Megan Ray Nichols is a freelance technical writer. She also runs her own blog, Schooled By Science, a blog dedicated to making complicated scientific topics easier to understand. You can follow Megan on Twitter @nicholsrmegan to keep up with the latest news.