Case Against Digital Freight Forwarding Platforms

In the era of technology, platforms such as Uber, Airbnb, and Facebook have transformed how their industries operate. Given this, there was an assumption that the shipping and cargo industry, known for its vast networks and detailed operations, appeared to be next in line for such a shift. However, a recent study by Deloitte indicates it might not be that straightforward revealing both the challenges and opportunities that digital transformation brings to this traditional sector.

The risk of disintermediation is highlighted in the Deloitte report regarding the freight forwarding industry. This indicates that new technologies or business methods might step in and take a central role. Online shipping platforms like Alibaba exemplify this, as they offer companies a simpler way to send products directly to consumers, potentially bypassing traditional freight forwarders.

The push for platformization in the freight forwarding industry is evident as many businesses recognize the advantages of adopting a platform model. By establishing digital hubs, they aim to simplify the connection between those who wish to send goods and the transporters. Flexport is a good example of this movement, offering an online service where users can compare and select shipment rates.

As promising as the push toward digital freight platforms seems, are there aspects that could challenge their widespread adoption and effectiveness?

The Unique Nature of Freight Forwarding

Freight forwarding is an industry steeped in tradition, with roots tracing back to medieval times. Forwarders have, for centuries, organized transportation on behalf of shippers and carriers. They've evolved into experts in supply chain management, warehousing, packaging, and documentation. This expertise, built over decades, cannot be easily replicated or replaced by a digital platform.

Tailoring Solutions for Shipper's Specific Needs

One of the primary difficulties encountered by digital platforms is addressing the unique and specific prerequisites of shippers. Shippers often necessitate customized solutions, price guarantees, ample loading capacity, and consolidated invoicing. These demands are not readily accommodated by universally applicable digital solutions.

Who Does What and How Sure Are We?

In the world of transportation, different players have their own jobs and legal duties. The strict rules about who's responsible for what can make it tough for digital platforms to keep things under control. Trust, which comes from lots of face-to-face meetings and successful deals and deliveries, is a big challenge to recreate on a digital platform.

Preserving Conventional Perspectives in a Digital Era

Despite the swift advancements in technology, a significant number of players in the freight forwarding sector uphold traditional viewpoints. This, along with a culture inclined towards short-term investments, poses challenges in embracing a complete digital transformation.

Seeking Competent Professionals

Freight forwarding needs a balance of traditional logistics and digital know-how. However, it's not easy to find people who excel in both areas, commonly referred to as "digital forwarder experts." Without these experts, creating and maintaining a successful digital platform becomes a real challenge.

Alternative Platform Dynamics

Rather than completely switching to digital platforms, there are now different ways of approaching this. We're seeing smaller platforms that focus on specific groups, local systems that meet community needs, and combinations of traditional and digital services in digital forwarders.

The freight forwarding industry stands at a crossroads, where the emergence of digital platforms offers a blend of challenges and opportunities. Deloitte's findings shed light on the industry's unique dynamics, steering the path ahead towards a more intricate direction. In recognition of this complexity, Logic Solutions focuses on equipping freight forwarders with digital tools to enhance their operational efficiency. Rather than imposing a top-down approach seen with other platforms, Logic builds trust organically by appreciating the nuanced processes within shipping. This strategy ensures the preservation of the industry's core principles and expertise while embracing the advantages of digital transformation.

‍