M&A radar: Expeditors, the 'Agility' nobody could get (yet)
Reasonable. Totally understandable. Yet beware the snake from Seattle.
Shippers are set to use quality standards data from Cargo iQ in their bid to improve processes and efficiencies – and have urged forwarders to be more transparent.
“We can’t plan that well,” admitted Robert Mellin, strategy development manager for Ericsson. “We always tried to push cargo out on a Friday night – but we didn’t realise that it then stops at an airport on Saturday and Sunday.
“We need to know how capacity looks, and want to understand that, together with a forwarder, so that we can plan.
“Today, we don’t have that dialogue.”
Mr Mellin added that shipper processes tended to be inefficient because they treated each shipment and tradelane in the same way.
“We have thousands of tonnes, and each airport is different. We can’t look at them all manually, so we treat them all the same – but it is not efficient.”
Manufacturers are becomingly increasingly aware of logistics requirements: cost, track and trace, supply chain planning. Essa Al-Saleh, CEO of Agility, said customers were increasingly demanding solutions.
“Shippers have become much more knowledgeable about our industry, which is a healthy situation. It raises the bar for everybody. If you want to get better as an organisation, you need someone to challenge you. You don’t want to be in your comfort zone.”
Logistics costs, although a major part of shippers’ total spend, is not the only issue, they argued.
Lars Droog, head of EMEA supply chain for chemicals company Tosoh, said he disagreed with procurement that focused on figures alone.
“There are so many ways you can cut costs on air freight. When you only focus on rates, it can result in carriers leaving the market and that is not in the interests of shippers. There are ways to cut costs without lowering rates.”
One of those ways is better planning, with improved efficiency as a result – a method that the recent tie-up between quality standards organisation Cargo iQ and the Global Shippers’ Forum seeks to boost.
Cargo iQ can help shippers understand why freight is late, when capacity is in demand, and what the best processes are.
“One of my jobs is to connect the market with shippers,” said Rogier Spoel of the European Shippers Council. “We need to get Cargo iQ out to shippers, but there is a lack of knowledge over how to use it. There is the possibility to make air cargo an attractive option.”
He added that shipper groups would actively start promoting Cargo iQ among their members and that a single standard, even it it covered only part of shipper requirements, was better than no standard at all.
Other shippers were focused on achieving stable rates.
Marc Dellafaille, purchasing manager for AGFA, which has insourced its forwarding, said: “Manufacturers have stared to launch standards, and see that logistics is expensive. We spend $100m purely on logistics – it’s an important cost.
“We don’t use forwarders because we can’t have rate changes every few months. We need an idea of the cost, so we go for long-term agreements with carriers.
“Some shippers negotiate directly with carriers but give the rest [of the business] back to forwarders for a set fee.”
One of the problems is sales departments of forwarders, whose constant focus on sales resulted in frequent changes of rates, not necessarily to the benefit of shippers who want stability.
Lucas Kuehner, head of air freight for Panalpina, said he didn’t have a bad perception of procurement departments.
“They are professionals, so long as they don’t switch business every year. I think shippers want long-term relationships, but at a fair rate.”
He added: “And air cargo is not expensive. Try giving your freight to an integrator – then you know what expensive is.”
The shippers were speaking at an ill-attended discussion at TIACA’s Air Cargo Forum in Paris last week, where they had hoped to answer questions from carriers and forwarders on what they could do to improve their behaviour.
But as moderator Enno Osinga, a consultant, said: “Shippers want to talk about what the industry needs from them – so where the hell is everyone?”