Freightos survey says forwarders are running out of time to modernize

Freight forwarders have come a long way toward adopting digital processes over the last three years in anticipation of the e-commerce revolution, but time is rapidly running out for the laggards that have not yet embraced digitalization. A recent study conducted by Forrester Research for online logistics firm Freightos said some forwarders may be out of business with in the next decade if they do not focus on immediate customer needs.

Because today’s technology has given shippers more choice and higher expectations for information-sharing on demand, logistic providers without these capabilities will have a hard time staying relevant and are “likely to face an extinction event in the next ten years,” said Nigel Fenwick, vice president and principal analyst for Forrester Research. “And while you may see it coming, you may not have enough time to save your company.”

In the third annual “Mystery Shopper” report, released this week by Freightos, Forrester assessed the online performance of the top 20 global freight companies to measure the penetration and usage of digitalized processes. To evaluate the processes, researchers posed as shippers from a real, rapidly expanding U.S.-based e-commerce company, and made quote requests for a less-than-container-load shipment to be delivered, door-to-door, from a major Chinese city to a major U.S. city.

The researchers concluded that over the last three years, the forwarders in the study have raised the levels of digitalization have risen quickly from zero percent to 25 percent. Also, three of the top 20 forwarders – DHL Global Forwarding, Kuehne + Nagel and UPS – now provide instant, door-to-door airfreight quotes, with two more poised to roll out similar services. So far, Freightos said there has been more progress with digital freight sales in airfreight business than on the maritime side.

However, Forrester noted that forwarders’ “inability to meet customer expectations is holding them back.” Although B2B business has seen a meteoric rise online, only 15 of the top 20 forwarders surveyed had an online contact form, nine of which provide either instant quote or an ad hoc request for quotation forms – which is three more than last year. The other six, Freightos said, were “too general, failing to explicitly request everything required for quoting.” Four were simply generic inquiry forms, and the remaining five companies only provided an e-mail contact.

The five forwarders contacted that still use manual rate techniques took an average of 57 hours to respond to quote requests, the study found – and eternity in an industry that it demanding real-time service – and 72 percent of the surveyed forwarders failed to quote at all. Errors, as expected with a manual process, were prevalent. “One forwarder incorrectly quoted airfreight instead of LCL, while two omitted ancillary services,” the study found. As a result, the study calculated of 58 percent price spread for the quotes that were made, suggesting an urgent need for greater transparency in the process.

“For the most part it’s clear that the customer-centric message is getting through. The challenge is daunting, and by no means unique to freight,” said Zvi Schreiber, CEO of Freightos. “But our industry, after all, is a service-based industry. It’s no surprise logistics providers are leveraging technology to make life better for shippers. …After all, when it comes down to it – digitalization is nice, but customers are better.”

“Results from this annual online freight sales research shows progress,” the study concluded, “but there’s still a long way to go.”