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The freight forwarding market is changing. Fast. We all know this and not many of us are surprised.
For the past three years, on behalf of my market research firm, Logistics Trends & Insights, I’ve conducted an annual survey on this change. Each year I’ve asked what a freight forwarder is and the majority of the responses have always been “a firm specialising in arranging and shipping of merchandise on behalf of shippers”.
However, that definition is changing rapidly, like everything else in the logistics world. Almost a third of last year’s responses noted a forwarder was a facilitator, a value-adder and a consultant.
A digital metamorphosis
By now, we’re all aware of this digital revolution that we, in the logistics world, are in – blockchain, machine learning, artificial intelligence, augmented reality, virtual reality, predictive analytics, the list is longer than my arm – this definitely ain’t your father’s supply chain.
The freight forwarding world, the one many of us grew up in involving the phone and emails (sorry, I never used a fax machine), a rate quote that took three days, if we were lucky, and having no idea if our freight was in the middle of the ocean or sitting at the port. Those days are long gone – or that’s at least what we’ve been told by the media, the start–ups that are looking to disrupt this space and the new investors taking on the logistics market.
In this whirl of announcements of proof of concepts, funding rounds and how blockchain is going to change our lives, we’ve become mesmerized by the digital forwarder. In particular, Flexport, which describes itself as a ‘digital forwarder and customs broker’ and who recently received a $1bn investment from Softbank, and then there’s FreightHub, ‘the European digital forwarder’ which received $30m in investments in early May.
So, what exactly is a digital freight forwarder? For the life of me, I have not been able to find a proper definition, so I turned to my Twitter friends, many who are respected logisticians and who I admire and have learned so much from over the years, for an answer.
Defining the digital freight forwarder
I received many comments, all of which can be viewed on my personal Twitter feed. In fact, I encourage folks to read them because they all differ but they are all correct in my opinion. We may not necessarily have a clear definition of what a digital freight forwarder is, but what we all know and understand that it is indeed about the technology, and the need for such investments to make the supply chain space as efficient and transparent as possible, to meet the needs of our clients as they themselves compete in rapidly changing industries.
What many of us missed in the traditional world of forwarding was this wave of technology as we were just trying to survive one of the worst global recessions in recent history back in 2008. Meanwhile, the start–up environment was just in its initial bloom and soon captured our attentions with such headlines as ‘tech eats everyone’s lunch’, the ‘end of the traditional logistics players as we know it’, and so on.
Eleven years into this revolution and the ‘traditional’ and the ‘digital’ players are still with us. The ‘traditional’ players are making their technology investments now and the result, at least in my opinion, has blurred the digital and traditional definitions.
I share with you some of the comments, and if you are inclined to add your thoughts, please do so on my Twitter page, or on the comments section below.
Communication and collaboration, as we all are aware, are not only important components of a good supply chain, but an excellent way for all us to learn together.
I think a digital forwarder is mostly used as a self-described term for some newer forwarders, and thus has lost most of its supposed meaning. You are a digital forwarder if you identify as one, not by virtue of any single or combination of features. – Alex Hoffmann, co-founder and managing director of TNX Logistics
Any forwarder who uses less manual intervention (on calls/emails) and is able to automate as much exchange of information on a single transactional cycle of a pick up to delivery is a digital forwarder. –Sumit Varma, Entrepreneur, logistics and supply chain professional
Cathy, there is no such thing. All service providers, asset and non-asset-based, upgrade — Carbon copies, to telex, to fax, to Unix, to windows, to EDI, to SaaS, to internet, to cloud… to whatever brings efficiency and multiplies productivity. Quite simply, we adapt. Cheyenne Miranda, director of international logistics at R+L Global Logistics
A digital forwarder is half a marketing term for fundraising and talent, and half building technology to improve operating margins which is difficult to do without outside financing. Not meant to be a negative description by any means. I have and will continue to invest into this business model. Julian Counihan, Schematic Ventures, a digital industrial venture capital fund
Great question, Cathy. I think what people really mean when they say a forwarder is digital, they’re really saying they are a digital-native company. Like in retail, there are great examples of digital immigrants adapting very well, as well as digital natives ending spectacularly poorly. Adaptation is key for both. – Brian Patrick Bourke, VP of marketing for SEKO Logistics
Cathy Morrow Roberson is The Loadstar’s new columnist on freight tech. She will be road-testing various IT platforms and developments. If you’d like your product to go under the spotlight, please contact [email protected]