E-commerce adaptation should be evolutionary, not revolutionary

No matter how much we tried to be cool kids in junior high school, there was always a group of cooler kids that the rest of us emulated. They wore the latest fashions, used modern language and smoked when or where no one else could do so. At that stage of life, if the cool kids were doing something, you had better do it, too, or suffer the consequence of mediocrity for the remainder of your school years.

When it comes to the e-commerce phenomenon, many freight forwarders are looking for ways to participate to avoid the same fate of those who failed to follow the cool kids in school. The assumption is that if competitors are participating, your company will perish if it is not involved in online fulfillment or shipping.

However, as our parents would remind us (and as we soon learned), doing something because it appears to be popular may not be cool at all.

To be sure, e-commerce is having a profound effect on the consumer goods marketplace and the supply chains that have historically supported them. These tend to include smaller items, such as books, dog food, groceries and even the occasional piece of furniture or flat-screen television. When it comes to industrial goods, however, the impact has not been so extreme.

Forwarders routinely deal with complex shipment requirements that may require an online component for communication and ordering, but clicking and shipping have not replaced good old-fashioned human interaction. Aside from the business of traditional retail e-commerce shipping, our industry continuously thrives by meeting logistical challenges unrelated to e-commerce.

An example lies in the convention services industry, where shipments moving in and out of trade shows may face many requirements, including specific loading time commitments, size limitations, and service parameters. The entertainment business shares these challenges, and missing the show is simply not an option. You can also take the airline industry, where vital components of all sizes require quick transport to a plane stranded on the ground somewhere far away. Forwarders know that online ordering may play a role in each of these instances, but only as a tool, and not as the ultimate solution to every logistics problem.

Many say that forwarders have missed the digitalization and automation era and are suffering from the resulting consequences – and, in some ways, that’s true. But our industry is far more sophisticated, streamlined, cost-efficient and user-friendly than it was in the old days, thanks to smarter methods of doing business and technology adoption. The primary difference is that, unlike in e-commerce, automation in the forwarding business has played an evolutionary role rather than a revolutionary one.

We see this evolution in the voluntary adoption of electronic media for the transmission of shipment information. While seemingly slow in its adoption of new technology, our industry is steadily embracing it, and our association wholeheartedly supports IATA’s e-Freight program. It is true that much remains to be done to standardize milestone data protocols, but, through this initiative, progress is being made.

One challenge that remains – not only for the freight forwarder but for all parties involved in cross-border e-commerce – is the unresponsiveness of local government agencies in quickly adapting to rapidly developing demands in logistics technology. Endless regulations, inflexible automation, an insatiable appetite for information and a reliance on paper not only slows down commerce, but has created an uneven playing field for forwarders needing to bring goods into the country quickly and efficiently.

In the United States, we have seen some progress through the International Trade Data System, or “single window” initiative. Many import and export transactions are conducted digitally through the Automated Commercial Environment portal. However, funding required to complete the project is tentative, and several participating agencies have not completed the necessary programming to engage in it.

The North American Free Trade Agreement (NAFTA) has not been changed since its inception 23 years ago, when some of today’s biggest industries, including e-commerce, did not exist. While the new administration takes an opportunity to review its provisions, perhaps connecting the U.S., Canadian and Mexican single window trade systems together would increase our industry competitiveness by moving products faster between partnering countries.

Once governments proactively reduce trade regulations and institute the automation required to move shipments between borders quickly, they should stand back and let the market do what it has always done best: innovate. Some may choose not to jump into the e-commerce marketplace in the traditional consumer delivery sense, while others will find creative ways to participate in one or more of its many parts. Regardless, the resourcefulness and innovation that forwarders bring to the table prove that, despite the challenge, when it comes to logistics, they are truly the cool kids.