Technology-based forwarders are on the advance, and some are showing signs of adding traditional forwarding capabilities to their portfolio, while established cargo agents are eyeing investment in technology in order to raise their game.

The assault of digital forwarders on the logistics arena is showing no sign of slowing down. The latest major entrant on the scene, joining the likes of Flexport, iContainers and Kontainers, was Twill, which went live in April after a test phase with a small number of clients. Twill is an offshoot of Damco, the third-party logistics arm of A.P. Moller-Maersk, which offers clients instant bookings, shipment tracking and document management. It is designed to provide instant quotes and features integrated document handling.

The new entrant’s range is currently limited to the ocean shipping sector from China to Britain, but Damco intends to expand the offering to more shipping lanes after a successful introductory phase.

Meanwhile, Flexport is taking on traditional elements of the business to broaden its appeal. In late May Flexport CEO Ryan Petersen revealed that the company was about to start operating warehouse facilities in Hong Kong and Los Angeles. These buildings are cross-dock terminals designed for quick consolidation and deconsolidation activities, and Flexport decided it needed these because of the frequency of moves it has been managing on this route.

Petersen indicated that Flexport will open similar cross-dock facilities in locations around the world down the road, but he did not name any likely cities nor give a timeline for this undertaking.

He is bullish about the prospects for his company and expects that it will end 2017 in the ranks of the top 50 forwarders in the trans-Pacific ocean cargo market.

In stark contrast with this, he has expressed reservations about the ability of traditional forwarders to defend their corner without making significant changes. For one thing, he expects the consolidation model by which forwarders have traditionally made money to dry up for them as the new online marketplaces enable airlines to adjust their pricing for different types of freight, allowing them to perform freight consolidation themselves more efficiently.

Largely driven by price competition, most forwarders are trapped in a race to the bottom, he argued, adding that the only way out of this lies in wielding technology.

Many forwarders have dismissed predictions of gloom arising from the emergence of digital rivals, arguing that these are not able to respond to problems that occur during transit. According to Petersen, though, technologies are evolving that can re-route shipments and he also sees progress in the development of freight guided by software that can make routing decisions without human intervention.

Overall the notion seems to be taking root in the forwarding industry that technology is not only a threat but also part of the solution for them. The digitization of processes like taking bookings or tracking shipments is increasingly seen as a step that can give forwarders a competitive edge and free up resources.

This was confirmed by Freightos, the digital rate platform, in recently published findings based on surveys of some 70 forwarders. The Freightos report revealed considerable scepticism about the future of traditional tenets of forwarder strength. Many expressed the belief that personal touch, while still critical today, will diminish in importance, and 74 percent expect that forwarding will be largely automated in five years’ time, similar to what has happened in the field of personal banking.

“Freight digitalization is inevitable,” said Freightos CEO Zvi Schreiber. “Those forwarders intent on providing a good service have a lot to gain from digitalization. Far from the threat it was once perceived to be, it may in fact be their best bet for future proofing their business.”

Brandon Fried, executive director of the US Airforwarders Association, agreed that forwarders have to embrace technology to stay competitive. Investing in automation to take care of aspects like providing status updates frees up their staff to concentrate on more productive activities and spend less time handling data, he remarked. The cost of automation is going down, he added.

By Ian Putzger

Air Freight Correspondent | Toronto