Transpacific box line freight rates nosedive as demand falls
The Asia – US spot rate components of the Freightos Baltic Index (FBX) slumped this ...
Forwarders without in-house tech resources can now offer instant pricing and booking on their website, after Freightos launched an online white label service.
WebCargo Vista, a freight rate management and online sales portal, allows forwarders to manage their services online and connect directly to rate management systems. It cuts costs, create efficiencies and allows customers visibility, claims Freightos.
It carried out research that showed only 25% of forwarders were able to offer an instant price on a set route, something “shippers are starting to demand as a service”, said Freightos CEO Zvi Schreiber.
“So that triggered us to make our technology available. Shippers are expecting it, forwarders want it, so we decided to open it up.”
Yusen Logistics is among the launch customers, revealing the size of business Freightos was expecting to sign up first.
“It’s not expensive,” explained Mr Schreiber, “but smaller forwarders don’t tend to like any expense.
“Smaller forwarders may also not have the resources to collect and maintain all the rates, so initially we think it will be medium and larger forwarders. But I expect that to change.”
As evidence, he pointed to the fact that online sales via its WebCargo platform grew 1,000% last year.
“We’ve been very busy trying to get carriers, and then it becomes much easier, with rates minute by minute; we are moving from stable to dynamic rates. And forwarders can get Vista and combine it with our rate management product, so we can offer the whole stack.”
Mr Schreiber noted that the move towards online booking had taken longer than the company expected.
“In 2018, we finally got Lufthansa, and then AF-KLM and IAG in 2019. But suddenly, in the past year, we’ve been adding airlines every month and we now have other large carriers like Qatar and Delta. I think every airline is looking at e-booking now.
“In terms of forwarders selling online, it won’t happen in one year, but maybe over three. Other forwarders will start to feel left out in three to four years.”
However, he added: “Once you’ve got a customer, they seem to stay for life. We have a 99% retention rate with forwarders, which is unheard of in other industries. So it might take a bit longer to get them in, but you keep them.”
WebCargo Vista offers door-to-door quotes, including on trucking and rail. Freightos has, since its inception in 2012, steadily built additional platforms to its business as and when the market has been ready. So what is next?
“Ocean is next. It’s beginning,” said Mr Schreiber. “Shipping is more conservative, and it hasn’t been as time-restricted. When you book a sailing of 21 days, one more day to wait for a quote hasn’t made much difference.
“I think the current situation in ocean freight won’t necessarily carry on for as long as people are suggesting, but I think it will accelerate the move online.
“When the ships are full, they love to raise their prices quickly, and it allows for quick price drops. At the moment, containers are getting rolled; the situation is insane and very annoying for shippers. Carriers are getting a lot of complaints. It’s in everyone’s interests to change.
“Customers just want to book, know which ship their cargo is on and what price they are going to pay. They want definite capacity and price.”
Freightos is also starting to see some use of hedging, using its FBX index on the Baltic Exchange, another trend Mr Schreiber expects to grow.
“Some of the big players are dipping their toes in the water. We are seeing a trend away from fixed prices tenders to spot, three-month tenders, and that will create a need for hedging. And over the next two years there will be a big increase in index-linked agreements,” he predicted.