Dive Brief:
- Digital freight forwarding startup Freightos conducted its annual anonymous survey evaluating the top 20 freight forwarders' quotation processes, finding that only Kuehne + Nagel was able to provide an instant quote with its online tool.
- In evaluating the forwarders, Freightos tested the quality of their online tools (did the form work?), the speed of response (how long before a quote is provided), and closing-quality (did someone follow up?). Nine of the 20 passed all three online "hurdles" and provided a quote, although 25% did not have a working online form.
- Freightos released a similar survey in 2015. Upon comparison, the new results show small improvements in technology as most forwarders still use manual processes, and a slower rate of response (15 hours in 2016, 7 hours in 2015).
Dive Insight:
Freight forwarders have come under the spotlight in recent years as various new entrants promising fast and effective online freight forwarding have entered the market. As a result, many have questioned whether the forwarder will, at some point, be replaced by digital tools altogether.
The report shows even the top forwarders, which arguably have the greatest resources, have been slow to digitize. Yet, the Freightos report also reveals that is not for lack of effort or trend denial, but rather competing priorities.
"We consider digitalization not as a disruption but as part our ongoing business evolution," Kuehne & Nagel Group CEO Detlef Trefzger told Logistics Management in November. In fact, a previous Freightos report shows the perception of online pricing platforms is not as negative as some may think: 62% of freight forwarder see digitization in online pricing as an opportunity, while only 15% view it as a competitive threat.
So why has the industry been so slow to adapt?
Perhaps because small and medium-size shippers have yet to demand it, and in fact may prefer a personal relationship with their forwarder to an online quote. In the U.S. alone, at least 97% of importers employ under 500 staff yet manage approximately one-third of the nation's global imports.
In addition, creating a program to translate unstructured form data to structured an actionable data could take time and resources even major forwarders are not willing to invest.
Nonetheless, the wide perception of online booking as an opportunity pose another question: at which point will neglecting digitization transform from an opportunity cost to loss of market share? Currently, the pie is only growing, but so are business expectations. While industry shifts in expectations advance more slowly than consumer shifts, the shifts in demands to warehouse providers by retailers may serve a valuable lesson.
At some point, manual processes will not suffice. The industry may be at an early stage of adoption still, but when the shift occurs, it will be the early adopters that will thrive while others race to digitize.
