The weaknesses of a traditional freight forwarder could be its greatest asset
THE awkward and unwieldy complexities of the air cargo supply chain, along with its seemingly immovable manual processes — such as paper-driven Customs clearances, unsophisticated ground handling processes and legal documentation — will all combine to save the lives of ‘traditional’ airfreight forwarders for up to another 15 years, key research predicts.
This is because so many of today’s significant, emergent trading nations — in which these forwarders all operate — are rigidly unable to escape from their corrupted paper-based local legacy systems, whilst also suffering from a lack of government investment, poor management practices and infrastructure and unyielding local cultural and habitual influences.
And, despite so much industry talk, for many of these undeveloped air cargo places, there is no electronic light at the end of the tunnel.
Only this week, an airfreight specialist published a post on the professional networking site LinkedIn, in which he reveals he attended a ‘digital transformation’ summit on freight forwarding in India — and was surprised to discover: “India has very few [digital] players. Indeed, only one or two have [an] online presence digitally,” he observed.
Certain aspects of a ‘traditional’ forwarder cannot be digitised easily
While the modern-thinking forwarders are more than happy to proudly boast about their successes when it comes to operating in hi-tech super hubs, such as those at switched-on destinations like Amsterdam, Singapore and Hong Kong, for example, at the same time they turn a blind eye when it comes to matters in Mogadishu, Montevideo or Mexico City.
This all means that supply chains connected with certain parts of Africa, India and South America, for example, will keep today’s non-digitised forwarders in business.
For now, value-added services like manual Customs clearances, labelling, packaging, the art of consolidating shipments and warehousing management will continue to be the main generators of profits for forwarders, and are not at risk as digitisation only slowly gathers momentum across the entire air cargo spectrum, notes top global consultants McKinsey & Company.
Forwarders make their living out of others’ shortcomings: their ability to overcome shipment problems is one of the top-10 requirements of their shipper customers, and their essential requirements also include a combination of the skills of a ‘traditional forwarder’, aspects which cannot be digitised easily, reveals the McKinsey research.
“To deal with errors in a way that’s reassuring to customers, [forwarding] companies must have infrastructure and relationships with airports, carriers, handling agents and at terminals across the world,” the report warns. “All this is hard to digitise. So is the work of a knowledgeable and caring staff — also among the top-10 needs,” it adds.
Amongst the top five services vital to shippers are competitive pricing, loss- and damage-free delivery, and reliable transit times, the findings show.
This all goes to explain why the top forwarders are only gradually digitising some of their services, observes logistics technology company Freightos. The company, which automates and monitors the freight operations of small- to mid-sized forwarders, recently released its third annual report assessing the online performance ratings for the world’s top 20 global freight companies.
Whilst the latest survey shows improvements in the last three years, with three top forwarders (DHL Global Forwarding, Kuehne+Nagel and UPS) now providing instant door-to-door airfreight quotes, more than a third of other forwarders in the report “don’t even have an easily discoverable online [application] form,” Freightos points out.
The report condemns those forwarders which continue to offer pricing quotes manually, taking 57 hours on average. Even worse, some 72 per cent of the surveyed businesses failed to provide any price quote at all — “missing out on digital business”, Freightos notes. Furthermore, there is a remarkable 58 per cent price-spread, despite pricing transparency being a critical requirement for customers.
It is no surprise that global research and advisory firm Forrester forecasts a mid-term gloomy outlook resulting from the forwarding industry’s languid approach to digitisation. “Your company is likely to face an extinction event in the next 10 years,” predicts Nigel Fenwick, the consultancy’s vice-president and principal analyst. “And while you may see it coming, you may not have enough time to save your company,” he warns.
Originally published at aircargoeye.com