LONDON, U.K.–Small- and mid-sized freight forwarders need to tap into the potential of innovative new technologies if they hope to remain competitive with logistics giants, according to a new white paper published by Ti in association with technology provider Kewill.
As recent acquisitions have shown, the large forwarders are increasing their scale not only to leverage their buying power and their geographic scope but also to develop their range of services, especially those that add value and increase margin.
If the small- and medium-sized independent freight forwarders are to compete effectively they will need to evolve. Not only will they have to become smarter and more efficient – in an environment where manual data entry is still widespread – but they will have to enhance their commoditized offerings, the paper said.
For some, this means developing their levels of expertise in niche sectors in order to differentiate their services.
Others will evolve from pure forwarders to fully developed logistics providers, increasingly serving customers with integrated logistics services. The technology systems they offer will be critical to their customer proposition.
“For today’s forwarders, the pathway to profitability lies with process automation and value-added services,” said Evan Puzey, CMO at Kewill. “The best way to achieve those goals simultaneously is through technology. Cloud computing gives freight forwarders, particularly the small- to medium-sized companies, the logistics toolkit they need to remain nimble in a highly competitive market with thin margins.”
“In the future, highly functional systems, operating as a single application – covering every aspect of operations from pricing, order management, shipping, warehousing and transportation management – will emerge,” said Ken Lyon, one of the white paper’s authors. “These will be available as subscription services in the public ‘Cloud,’ accessible via a variety of computing platforms.”
Independent forwarders need to leverage new technology to compete with market leaders.
Forwarders will continue to develop value adding services to expand their business proposition but need “cloud-based”, highly functional systems for control, visibility and flexibility.
The market leaders need to be more agile and fast moving in order to maximise the many opportunities which exist and overcome the problem of legacy systems.
What does this mean in terms of technology requirements? At the SME forwarder level, technology solutions will need to be quick and easy to implement, providing much higher levels of end-to-end visibility. At the other end of the spectrum, logistics giants will also need to adopt cloud solutions that remove the need for huge internal support functions. These solutions will require the capability of adding broader logistics services as and when required.
So who will win out in this battle between the independent forwarders and the logistics giants? It is clear that scale can be a help but it is also a hindrance in terms of agility and the implementation of innovative technology solutions. However for “independents” to prosper they will need to become smarter in order to succeed, grow and lock in customers. This means that they must exploit the opportunities that the democratization of technology has brought about as well as using the experience, expertise and decision-making capabilities of their greatest assets – their employees, said the paper.