All week we’ve been seeking contributions to add to the debate on how digitalisation is transforming shipping. Today, we seek the views of Dr Zvi Schreiber, the ceo of online freight marketplace, Freightos.
With 40 airplanes, a fleet of trucks, dozens of US distribution centers and an NVOCC license, Amazon is the latest (and largest) newcomer to the world of logistics. As the ecommerce giant’s shipping expenses climb, this strategy makes perfect sense. Jeff Bezos is sending a clear message to the industry; great technology can change the industry.
He’s right but he’s certainly not the only person saying it. After decades of being limited by technology, the convergence of three key trends are digitizing the logistics industry like never before:
1. It’s what customers want. By 2020, 50% of all the workforce will be millennials who grew up with Netflix, Amazon and Airbnb. These procurement employees grew up as children of the web, accustomed to the transparency and convenience of digital sales and they expect the same at work. If existing logistics providers don’t provide it, there are enough tech-enabled logistics providers that will.
2. The competition is (almost) there. Forget Amazon. According to a recent survey by Freightos, only one of the top twenty global logistics providers is currently selling online. Don’t expect that to last; top executives at Maersk, CH Robinson, DHL Global Forwarding are all speaking off the same sheet; digitalisation isn’t an if, it’s a when.
3. Logistics needs this. It’s been a rough couple of years. Shippers are consolidating providers, margins are dropping (especially on international air and ocean) and industry M&As mean steep competition. Capgemini research has found that up to 45% of a freight executive’s time can be spent on pricing and data analysis. Providers can’t afford not to take advantage.
The slow march of digitalisation
Make no mistake – the technology is here.
In 20 years, freight shipping will still likely take place with 20’, 40’ and ULDs. The main difference will be the underlying data technology that stitches carriers, forwarders, shippers and ports together. Today, cultural readiness – not technology – is the rate-limiting factor. It’s easier for a small forwarder or startup to adapt new systems. For a global logistics provider to switch systems takes much more effort. But players that mistake a slow transition with no transition will pay the ultimate price.
Last forwarder standing?
Taxi dispatchers fought Uber. Hotels fought Airbnb. Airlines fought Priceline. But freight digitalisation is a whole other ballgame. It’s not even necessarily a zero-sum game. Digitalisation means increased efficiency. Forwarders and brokers will still play an important role in supporting freight processes, bringing together carriers, customs brokers and service providers to make even the most complex supply chains purr.
For providers, there are two ways this will play out. Logistics players that have built their empire on merely being a pass-through, taking a margin for reselling rates and services, will find that their castles are built on sand. Companies that adapt technology to work better will continue to differentiate with outstanding supply chain services and incredible support, just like they always have.
Technology isn’t the enemy; it’s a lifeboat. And the alternative for providers is ctrl-alt-delete.