What Shippers Want A roadmap for online freight services
By: Zvi Schreiber, PhD
Table of Contents
Introduction: Online freight sales
Industries online: From travel to banking to freight
Why freight has been slow to move online
External demand for online freight automation
Internal drivers of online freight automation
Roadmap to online freight sales
The start of something great
Introduction: Online Freight Sales The trend is clear: more industries are quoting and selling online. Passenger travel has been online for 15 years. Even complex products such as insurance are moving to e-commerce. As global B2B trade expands in both scope and complexity, there is an increasingly acute need for instant anywhere-to-anywhere transportation price quotes and sales. Yet international freight remains a laggard of the e-commerce revolution. This paper presents real world experience, and data, of how other industries have leveraged online channels in order to increase sales and efficiency. The paper reviews existing challenges faced by freight forwarders and 3PLs, including more dynamic supply chains, increased competition, and changing shipper expectations. The opportunities for the transition to online sales will then be surveyed, together with a suggested roadmap for industry adoption.
Industries are going online: From travel to banking to freight In the past century, the shipping industry has developed along two primary vectors. The first, containerization, was a natural evolution in the scope of shipping. This continues today with mega-container ships.
Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale.
The second defining vector is information transfer. The information revolution paved the way for Marc Andreessen, WSJ improved information transfer throughout the supply chain. Inventory management and EDI spurred supply chain evolution among companies eager to save costs, increase efficiency and optimize warehouse organization.
Many industries were able to move more rapidly from internal connectivity to e-commerce: retail, consumer travel, financial services. After GDS connectivity facilitated efficient booking between travel agents and carriers, the airline industry became a global leader for e-commerce as well. In order to reduce costs and create a customer-facing solution, services such as Expedia took hold in the early ‘90s. This became so successful that airlines themselves also started eCommerce Takes Off: tickets booked online to offer online booking direct from their websites. Consumers loved the ease of access, efficiency and transparency; usage increased a hundred fold from 0.5% of tickets booked online in 1997 to over 50% as early as 2007(1). Empowered and educated consumers drove change, supporting e-commerce ready companies and pushing others online. Banking, and stock trading, which are both more complex and bear unique security concerns, are other examples of industries adopting widespread e-commerce activity be leveraging existing internal connectivity. First deployed in the late 1950s, ERMA was used for accounting and check handling in order to help banks scale to larger client bases. In 1983, the Bank of Scotland first offered bill paying over the phone. As demand surged in the 90’s and online regulation developed, banks increasingly offered online platforms for banking. By December 2014, over 55% of US customers preferred online banking, some with dedicated online banks. But there are reasons why freight forwarding services have so far eluded online sales.
Freight has been slow to move online
While freight shipping is the backbone of the global economy – $18.7 trillion dollars of goods were shipped in 2013 –online automation of sales has remained elusive. One possible explanation is the sheer complexity of rate management. One average mid-sized freight forwarder interviewed had dozens of ocean contracts, over 50 airline contracts and over 100 trucking contracts, with each of these 200+ What’s keeping Freight sales offline? contracts in a different format • Complex shipping rates and fees (some of them non-electronic) and changing at different frequencies. • Lack of standard tariff formats A global 3PL may have thousands • Prices originate from multiple countries of carrier contracts. Updates and different agents may come at any time, and • Value of Personal Relationships there is no standard data format • Freight as a big-ticket item for tariffs/contracts. The lack of standardization also means that one • Online security logistics provider may have rates • Culture of conservatism with three or four different names for the exact same fee. By definition, every international shipment involves parties in multiple countries - either different freight forwarders with an agent relationship, or different offices of the same forwarder. A modern freight forwarder may be able to automate internal rates, but if that forwarder is dependent on agents or other company offices, internal automation may not be sufficient; they cannot automate the full door-to-door quote until they obtain rates for the remote pickup or delivery leg. This dependency on a third party or overseas office lowers the incentive for partial automation creating a barrier to e-commerce. Many logistics providers also worry about the potential for automation to remove the personal relationship element that plays a vital role in freight. However, modern IT platforms have shifted over towards connecting, rather than alienating. Alibaba, for example, connects foreign manufacturers with importers, helping to forge new relationships, rather than replacing them with only digital transactions. Indeed social networking is a key element of many modern web services. The earlier days of the internet saw consumer goods sold online. Low priced consumer items involved less risk, easier pricing and catered to a broader online audience that was prepared to pay for the convenience of online shopping. It took much longer for cars to be sold online. Freight, as a complex big-ticket item, naturally missed the first waves of automation. However, B2B online shopping is growing steadily, doubling B2C e-commerce sales at about $560 billion of sales in 2013(2), creating new business opportunities for online sellers. Expanding online sales show that issues pertaining to B2B online trust and credit are being gradually resolved. Two decades into the E-Commerce revolution, online credit
“2013 B2B Commerce Trends”, Oracle, 2013
options for businesses are now widespread, with even the most reputable and sensitive industries, including banking and health, automating customer-facing solutions online. While legitimate concerns still exist, technological and online social credibility solutions are improving online credibility.
Things are changing: External demand for online freight While these barriers are significant, they are not impermeable. Indeed other industries such as insurance have overcome barriers which are arguably no greater.
Even as technology renders many of these barriers permeable, enabling higher connectivity in more realms, demands on logistics service providers are increasing. Modern supply chains are more complex than in the past, with more agile and efficient supply chains that create more demand on carriers and forwarders to provide instant transparent price quotes. Let’s examine the factors creating the need for instance pricing.
New Generation of Procurement Managers
Today’s procurement managers shop on their iPhones, download movies in seconds, and enjoy same-day retail delivery. Instant, online service is becoming more prevalent in the B2B world. This generation is defined by instant gratification; over 50% of internet users will leave a website if a video takes more than ten seconds to load(3). However, when it comes to international freight services, they are regularly asked to wait days for a price quote. In a mystery shopping program, evaluating quote requests from an authentic looking medium size shipper with repeat business to the world’s top freight forwarders, the average wait time on a quote was about three days. Worse, a staggering 43% of the online and email requests were acknowledged and later forgotten. A young procurement manager simply won’t wait 3 days, and the freight forwarder will waste time creating a quote for a customer who has already ordered from a competitor. Indeed the data shows that quoting first increases the chance of securing the deal by several percentage points. As such, it’s no surprise that the so-called “IT Gap”, which measures shipper satisfaction with 3PL technology, indicates that nearly 40% shippers are dissatisfied with their 3PL’s technological capacities(4). Given freight forwarding competition, today’s unsatisfied customer is more than likely a competitor’s future customer. Despite personal relationships, shippers have their own competitive pressures and can’t afford to be too loyal. In addition, while research indicates that 3PLs instinctively try to differentiate on price to attract business, 86% of the time a satisfied customer is willing to pay more (3) (4) 6
“Instant gratification is making us perpetually impatient”, Christopher Muther, Boston Globe, 2013 2015 Third-Party Logistics Study: The State of Logistics Outsourcing, Page 9
Benefits of Customer Satisfaction Happy customers will refer an average of 9 new customers. 86% of the time, happy customers will be willing to pay more.
Given 3PL competition, today’s unsatisfied customer is more than likely a competitor’s future customer
for service. This slight service premium is a valuable source of margin for 3PLs. Today customer satisfaction is all about instant service. A happy customer is also a valuable source of referral traffic; a satisfied customer refers an average of 9 new clients! In the relationship-first world of freight, word of mouth can make or break a business(5). But nowadays instant gratification is at least as important as golf in making customers happy.
Alibaba.com’s success is a testament to the rise of online B2B transactions. Frost and Sullivan anticipate that the B2B e-commerce market size will have a gross merchandise value of $6.7 trillion by 2020(6), with the B2B e-commerce market double the size of the B2C e-commerce market. The digital connection between suppliers and importers around the world has made headway, indicating online B2B maturity. Companies that communicate online, source online and pay online(7) find it anachronistic to go offline in order to complete the shipping process. This seems even more foreign when compared with the marked progress in the retail shipping space, with many providers offering next day, or even same day, shipping, all with instant transparent pricing.
Dynamic Supply Chains
EDI’s introduction into the supply chain over 30 years ago made complex JIT supply chain management possible, enabling a higher ROI by reducing in-process inventory and carrying costs. Unified protocols (EDI, XML and others) facilitates increasingly advanced external supply chains. This demands flexible responses from logistics providers, who may find themselves bogged down trying to price hundreds of alternate routes with time limited RFPs. The push for dynamic logistics quoting can also emerge from the consumer side, as unanticipated heightened consumption can be more easily tracked, requiring rapid transportation in order to bridge gaps. As supply chains become more dynamic, logistics providers will likely find themselves forced to provide either more spot quotes or more complex tenders.
(5) (6) (7)
Oracle Customer Experience Impact Report, 2011 “B2B eCommerce Market Worth $6.7 Trillion by 2020”, Sarwant Singh, Forbes, 2014 B2B Payments are Coming: Banks Must Prepare
The frequency of these tenders or spot quotes is also rising. Product lifecycles are on the decline. Approximately 50% of a company’s revenues are derived from products launched in the last three years(8). In electronics and fashion product lifecycles are still shorter. Every new product bears with it a bevy of new logistics requirements across the entire supply chain. For a logistics provider that successfully manages to attract repeat business, this still means expensive overhead from frequently generated tenders and spot quotes. Of course, shippers aren’t the only ones pushing for online freight sales. Internal motivations within 3PLs are playing a role as well.
“The Product Lifecycle is in Decline”, Karsten Horn, Digital Supply Chain, 2012
Internal drivers for online freight automation High Cost of Sale
As overcapacity, rate volatility and competition force companies into leaner operations, the cost of sale on rate or spot quotes can eat significantly into a provider’s bottom line. On spot quotes, generating a professional doorto-door international freight quote can easily take a total of 1 person-hour (part at the origin office Assuming 15-30% win and part at the destination). Once negotiations rate 2 hours quoting and are factored in, two hours of work could have per quote negotiation time been invested, costing employers $100 per quote(9). Typically 15-30% of quotes convert into orders so the forwarder may be burdened with $300 or more of direct cost, just for the time spent quoting, for each booking! In many cases that is more than the entire profit on the booking. Therefore there is huge pressure for forwarders to reduce the cost of sale of spot quotes by way of automation. Potential cost of sale for spot quote:
The cost of sale on tenders can be larger still. A pricing team can easily take weeks to generate a large enterprise tender. Even when completed, management scrutiny can cost a company higher labor hours. The workflow and operations/sale communication required can render rates significantly less profitable, particularly when winning the tenders isn’t guaranteed.
Resources for Quoting
The time required to compile quotes, rates and tenders doesn’t just add up into additional costs for logistics providers. A recent study found that freight sales executives spend about 43% of their time dealing with pricing, data and RFP issues, instead of focusing on improving business efficiency and relationship building(10). As a matter of fact, only 45% of a sales executive’s time is actually spent dealing personally with customers. This ultimately impacts both existing account management as well as future lost sales.
Assuming an average all-in salesperson employer cost of $90,000 per year. 2015 Third-Party Logistics Study: The State of Logistics Outsourcing, Page 37
The logistics service provider landscape is crowded, with well over 100,000 freight forwarders vying for business around the world. Even among the leading global freight forwarders, competition is fierce. The top ten ocean forwarders control only 8.5% of the market, while air forwarding fares slightly better, at 25% market share(11). As a result, 3PLs are forced to be extremely 10 of 11 forwarders would competitive. To better compete, logistics providers be immediately open to price end up differentiating on price rather than value negotiations for new business, when trying to land business. One study found that dropping as much as 30% of the 10 of 11 forwarders would be immediately open to initial price within two to three price negotiations for new businesses, dropping conversations as much as 30% of the initial price within two to three conversations(12). This translates into lower profit margins and pricing wars. A recent study found that 53% of shippers are currently consolidating vendors, which can force logistics providers who compete on price to further lower their ultimate take(13).
While revenue for the freight industry has remained relatively stable, it has not achieved the rapid growth it enjoyed during the early 2000s. Not only has the size of the pie being shared by freight forwarders remained almost constant, with a decline in 2008-2009 (leading to a 14% decrease in US trucking tonnage, and nearly a 10% decline in air freight)(14) slow growth of only 3.2% in 2013(15), the industry has a traditionally low profit margin on these revenues. Roland Berger assesses that freight EBITDA profits remain in the 1%-4% range of revenue(16). This low margin can also be volatile. An inherent part of the global economy, changes in global manufacturing or trade can have severe impacts on the already low margins of logistics providers. For example, in 2010, two years after the initial recession hit, nearly 50% of leading 3PLs in the US were still not meeting revenue growth projections, with 20% of the same 3PLs not turning any profit(17). Low and vulnerable margins amplify the importance of cost-cutting and lean operations to maximize profits. These profit margins are further lowered by mistakes in invoicing or quoting that typically plague non-automated industries. A former Maersk CEO recently hazarded a guess that 12% of invoices have inaccuracies, while other industry leaders put the number significantly higher. The result is over $680 million dollars in annual errors(18), many times taken out of the pocket of 3PLs. (11) (12) (13) (14) (15) (16) (17) (18)
“Freight Forwarding: Sustainability of Business Models”, Matthias Hanke, Roland Berger, 2012 “Ocean Freight Sales: discounts dominate, not value selling”, Simon + Kucher & Partners, 2014 2015 Third-Party Logistics Study: The State of Logistics Outsourcing, Page 12 “Trends”, Joseph O’Reilly, July 2009 “2014 growth in 3PL business, revenue projected”, Corianne Egan, Journal of Commerce, 2014 “Seafreight Forwarding: Business Model Under Pressure”, Roland Berger, 2013 “Annual 3PL study indicates industry is showing post-recession growth signs”, Jeff Berman, Logistics Management 2010 “Digital Shipping Platforms Cut $684 Million in Errors”, Isaac Arnsdorf, Bloomberg, 2014
Roadmap to online freight quoting
High cost of sale, increased competition, low margins and poor time management demand leaner and more efficient logistics operations. Relationships are and will remain critical in freight. However, these relationships can be bolstered by an automated support system that gives the customers the quick service they want, and frees up expensive personnel to focus on finding new customers. Other industries have successfully leveraged online automation to work faster and better, and freight, while a complex industry, is no exception. Once managed by an online freight sales solution, automated data can facilitate faster and more accurate freight activities, freeing up sales executives to focus on relationship management, enabling instant rate generation, single source of truth for pricing, faster customer interactions and better customer service. The optimal way to implement this is via a gradual roll-out: 1.
Internal rate management and quote automation to facilitate internal, in-house automation, while providing business intelligence insights across the company.
Sharing rates with trusted agent and carriers, establishing instant, multi-leg quoting together with existing partners.
Online rate calculator for established customers, enabling them to log in to the logistics provider’s website and generate instant quotes, based on their agreed tariffs.
Online commerce where website visitors can obtain quotes and place orders, converting visitors into paying customers with near zero cost of sale.
Online rate calculator for existing customers
Internal automatic pricing
Sharing rates with agents/overse as offices
Online Freight: Internal Pricing Automation Core Benefits Instant quoting – higher win rates Eliminating errors Reduced cost of sale Big-data insights
At the core of the automatic price quoting process is managing buy rate contracts. Technological hurdles in automating complex rate management have recently been overcome, allowing even complex multi-modal rates to be accurately captured in a database. Modern routing and pricing algorithms can accurately plan and price door-to-door multi-modal freight forwarding quotes in seconds. Once contracts are centralized and available throughout an office, it provides instantly tangible benefits: Accuracy: When buy rate contracts are managed, the system emerges as a single source of truth, with instant pricing propagation through the entire organization. Carrier price updates and short-term promotions may be instantly disseminated, and various mark-up levels can be built into the online system, allowing across-the-board control over pricing.
Time spent updating to current market conditions has been greatly reduced... Automating the quote process has improved the customer experience and ultimately our customer relationships Shu-Chun Tsai Apex Logistics
Customer service: Rate management with quoting automation facilitates far faster operations, enabling near-immediate turn-around for customers. As discussed above instant responsiveness is a key factor in the satisfaction of the modern customer. Efficient operations: Data management is one of the biggest time spends in freight. Sales executives, operations desks and pricing managers all spend significant amounts of their time on inputting, updating and extracting pricing data. Automating pricing can reduce rate distribution to mere seconds, spot quote requests to minutes, and even tender generation to just hours. This increases profitability and frees up time which may be invested in relationship management, process optimization and more, allowing businesses to grow instead of just treading water.
Big Data insights: Automated quoting brings with it unprecedented insights into the sales process including the performance of each sales office, sales person, customer, margins, and trade lane. Business intelligence can also be used to analyze market pricing trends, seasonal variation, competitive pricing, all of which can be leveraged for improved negotiations and more competitive tender pricing.
Online Freight: Sharing rates with Agents/Carriers Core Benefits Rapid rate update from carriers Extend instant quoting to door-to-door quotes worldwide Fill out product offering to cover all modes and lanes Increase sales via agents
Stage two of online freight automation allows a logistics provider to automatically receive rates from carriers and share rates with agents or overseas offices. For example, imagine a freight forwarder in China and another in the US networking their rate repositories including local pickup and delivery charges on both sides (complete with mark-ups). By pooling rates, suddenly both companies can instantly and accurately quote door-to-door shipments between China and the US, despite the fact that they are in different time zones, using different languages and currencies. Both companies now have a more comprehensive offering, and quote faster with lower cost of sale.
Carrier integration: Today, carrier rates are frequently distributed in non-standardized Excel, PDF or Word format. When dealing with hundreds to thousands of contracts, this creates a blizzard of constantly updating contracts with critical details that are occasionally lost in translation. Each GRI means time wasted on format changes and distribution. However, modern rate management systems may have the flexibility to digest many Excel formats. And some carriers are already providing an API (Application Program Interface – the modern version of EDI) for online quoting. However APIs are so far common for trucking (especially in the US) and unusual for other modes. Carrier integration: Today, carrier rates are frequently distributed in non-standardized Excel, PDF or Word format. When dealing with hundreds to thousands of contracts, this creates a blizzard of constantly updating contracts with critical details that are occasionally lost in translation. Each GRI means time wasted on format changes and distribution. However, modern rate management systems may have the flexibility to digest many Excel formats. And some carriers are already providing an API (Application Program Interface – the modern version of EDI) for online quoting. However APIs are so far common for trucking (especially in the US) and unusual for other modes. Agent integration: Even when an office or company has automated quoting, relying on agents for pricing can be a wrench in the pricing gears. During mystery freight shopping trials conducted by Freightos, it was not rare for two legs to be quoted in only hours but for quote turn-around time to be extended to days when waiting for a remote pickup or delivery leg from external agents. However, agents using the same freight online automation system can share their rates with other logistics providers, including built-in markups if required, to make agent quoting rapid and accurate. This cross-company integration can facilitate faster operations and more transparent pricing in seconds.
Online Freight: Web-based customer rate calculator Core Benefits Increased customer satisfaction Zero-workload quoting and bidding CRM for insights into shipper behavior Increased allocation and customer loyalty
Once all rates and quoting are automated, it’s as easy as flicking a switch to allow customers to access online quoting, much like your sales representatives and agents enjoy. In the competitive freight marketplace, a differentiator of providing customers with instant, online quotes can be a true game-changer. Changing supply chains and JIT deliveries requires prompt service, which can overload sales agents. Customer-facing quotes solves this problem, while facilitating more efficient operations. Instant online quoting: Valued shippers can be provided login details to the 3PL’s own web site supporting instant quoting based on the shipper’s tendered rates. Whenever
tendered rates are not available, the shipper can obtain spot quotes based on the logistics provider and its agents. A large shipper may have dozens of people involved in logistics and they can all become accustomed to using the 3PLs web site as their primary resource for planning and pricing shipments. The end result is a satisfied loyal customer that can generate instant quotes without slowing their workflow. Zero-workload quoting: Increases in quoting activity can frequently create a severe burden on a logistics provider’s pricing and sales team. As discussed, the labor cost of a spot quote may erode all the profit of a spot booking. With customer-facing quoting, this issue is resolved, as the sales team is freed up to deal solely with relationship management and secured quotes. Providers can bid more (and win more when differentiating with faster, more accurate quotes) while saving from reduced sales costs. CRM for shipper insights: By tracking shipper quoting activity, your sales team can identify changing shipper needs, remaining ahead of the curve. Notice a drop in customer quoting? Quickly call the customer and address the underlying issue whether it be service or cost. See a sudden uptick in a trade lane? Maybe you can squeeze out a bit of extra margin. Shipper log: Let shippers maintain a log of their quoting activity on your website. The insight and trends that they will be able to discern create additional buy-in that keeps your customers coming back.
Online Freight: Public Quoting and e-commerce Core Benefits Develop a major new revenue stream from SMEs Online lead generation Near zero cost of sale
In 2014, double as many B2C and B2B businesses cited inbound lead generation as their primary source of lead generation than businesses citing outbound leads as their primary source(19). Research into new business partners takes place more and more online. By the time a new customer approaches a supplier, 57% of the purchase decision is already completed(20). All of which means that the online customer journey your customer takes should be flawless. TMS systems increase the efficiency of internal operations; online freight quoting platforms can do the same for external, customerfacing operations. Easy access to cost and shipment prices is the second-most demanded (19) (20)
“State of Inbound”, 2014. “CEB Research”, 2014.
service from shippers that work with 3PLs, second only to real-time info on shipment info. Unsurprisingly, the next three requirements also focus on faster, more efficient online operations(21). System Feature
3PL User Ranking (1-5)
Availability of real-time information
Easy access to cost and shipment pricing
Increased 3PL ability to respond to requests
Greater visibility of global operations
More professional/productive sales calls by 3PL executives 3.0 Survey of online features requested by shippers
Improved customer experience: Allow customers and potential customers to generate quotes instantly, right from your website. Instant quoting, combined with an outstanding customer experience, broadcasts that a technologically-adapt logistics provider that puts the customer first. Convert visitors into leads: Making pricing visibility contingent on the user providing some data, such as their email address or telephone, allows logistics providers to convert website visitors into leads, and from there into customers. Online quoting and booking is particularly relevant to SMEs, which play a crucial role in the import/export ecosystem. In the United States, over 97% of companies that export and import are SMEs with under 500 employees(22).
Automated quoting Sales-Op Connectivity
Rapid rate updates
Pricing/ Performance analytics
Instant agent quoting
On-demand selfservice quoting Shipper log Inbound customer experience
2015 Third-Party Logistics Study: The State of Logistics Outsourcing, Page 39 “US Exporters in 2011: A Statistical Overview”, 2011
While promising, there continue to be certain obstacles that hinder the full adoption of online freight e-commerce. These challenges can be broadly divided into technical obstacles, which are rapidly being resolved, and cultural barriers, which currently limit adoption to the most forward-thinking logistics providers. For example UPS Supply Chain do provide instant door-todoor air freight quotes online and some smaller providers also quote FCL online.
Data Sharing: Each office of freight forwarders has typically had its own P&L which has been a disincentive from sharing rates even with other offices within the same organization. However, industries like banking have successfully bridged this obstacle with rule-defined sharing and security that silos data while allowing limited, approved access.
Training customers: While extremely beneficial to customers, online freight procurement is a recent development that may not be familiar to shippers. The idea of being able to generate and book an online shipment of a small product may be familiar to customers from Amazon but doing the same in a freight business is a fundamentally different experience. To fully leverage the benefits of online freight platforms, it is critical to train shippers about both the processes and the platform.
Lack of standards: The independent development of proprietary internal systems for freight procurement has led to a plentitude of internal standards for air, ocean and land freight. This goes far farther than different rate formats; one logistics provider may have three or four different acronyms for specific surcharges. Overcoming this challenge requires either powerful software or a cultural change from carriers, which must be kick-started by 3PLs and shippers. The evolution of data standards, like EDI and more recently eAWB, are proof that the industry recognizes the importance of industry coordination, but even these show significant shortcomings in full adoption.
Cloud computing: To allow optimal global access and analysis, online freight computing generally relies on cloud storage. Logistics companies are used to having all their missioncritical data in their own data center and some still see cloud as a risk. Just as companies keep their money in the bank (not under the mattress), more companies are recognizing that storing their data in a professional secure cloud is cheaper and actually more secure than keeping it in-house. Cloud technology from global providers like Amazon and Google adhere to best practice security standards (ISO 27001, SSAE 13 / SSAE 3402 / SOC 2 Type II Audit) which in-house IT cannot usually match. Cloud has been adopted by leading enterprises in logistics and beyond, such as DHL, Siemens, Shell, Pfizer, SAP and others. Still it requires a conceptual shift for many logistics providers and IT may be reluctant to lose control of the hardware.
Rate management: The myriad of rate formats requires smart automation software that can instantly identify rate formats, surcharges, templates and other text details in each rate in order to standardize and formalize it.
Routing and pricing: One reason that freight has been so slow to automate is due to the complex nature of the routing and pricing of shipments. Complex, big-data algorithms are required in order to generate dynamic routing and all-in pricing from thousands of contracts, millions of port pairs and countless surcharges. In the past this was a real barrier, but in the era of Google Maps and Kayak, it is more than feasible to consider millions of routes and produce an optimized door-to-door quote in seconds.
The start of something great: freight is moving online
Following suit from other industries, forward thinkers in the industry are already adopting online freight quotes and sales as a key differentiator, gaining an important competitive advantage in a crowded market space. Early figures point at significant benefits for early adopters. Preliminary research shows that even mid-size logistics providers can eliminate over $150,000 of operating costs with automated quoting(23), while other forwarders have reported spot quote win ratios that improve by an estimated 20% with faster, on-demand quotes. Online freight sales platforms can provide unprecedented efficiency and optimization in the logistics sales process. The roll-out process can be just as efficient. Since many platforms are cloud-based, and browser and an internet connection is all that is necessary to deploy these platforms to hundreds or thousands of users. Generally packaged as SaaS (software as a service), these platforms can also be significantly cheaper than deployed legacy software, that also accrues expensive installation and maintenance fees. Early adopters have already tapped automated freight rate management and quoting, and online quoting, as the future of logistics sales. Much like in other industries, pioneers gain the first-to-market advantage, increasing market share, by enhancing both external and internal transparency and efficiency with e-commerce and, most importantly, providing an outstanding customer experience. These leaders stand to reap huge benefits, usually at the expense of companies that lack the vision, who ultimately hemorrhage market share to more innovative competitors.
“Freightos Kestrel Case Study”, 2014.
Free Online Audit Freightos has developed an internal audit in order to assess adoption of online freight sales. More than 1/3 of the world’s fifteen freight forwarders have already taken the Freightos Challenge, conducted through a series of mystery shipping pricing quotes. The results? • Not one company so far has customer-facing multimodal online quotes. •
The average time to quote to a prospect SME was over 60 hours.
43% of all quotes requested went unanswered.
Glaring problems in internationalization, quote uniformity and clarity
Curious how you compare to the world’s top freight forwarders (and how you can gain a valuable leg up in automated quoting)?
Click here to request a free online audit.
About the Author
Zvi Schreiber has founded and led multiple high-tech companies, including Tradeum (acquired by VerticalNet), Lightech (Acquired by General Electric), Unicorn Solutions (acquired by IBM) and G.ho.st. At Lightech, Zvi had significant exposure to the freight world from the perspective of a shipper. The lack of online automation and inefficiencies he encountered here ultimately served as a catalyst for creating Freightos. Zvi studied in the University of Cambridge and Imperial College, earning a PhD in Computer Science. He is the inventor of multiple patents and has written and spoken widely.
Freightos is automating the trillion dollar global B2B freight industry and bringing it online. Using big data technology, Freightos enables freight forwarders, shippers and carriers to manage rates and automate freight booking and pricing online, introducing unprecedented efficiency and transparency into the industry. Registered in Hong Kong with offices in the Middle East, Asia, Europe and the US, Freightos has already helped dozens of freight forwarders, including top ten global companies, as well as Fortune 100 retailers, automate freight sales, routing and pricing online, while providing big data-drive business insights to optimize operations. Learn more at www.freightos.com.
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