Freightos report takes deep dive into the ‘digitization’ of freight forwarding

As the digitization of freight forwarding is widely viewed as an ongoing process, a report issued this week by Freightos, a SaaS-enabled logistics technology provider focused on instant freight quotes for freight forwarders and shippers, highlights how the ongoing road towards digitization and will change customer service differentiation.

The report, entitled, “We Differentiate On Service/Forwarders in the future of service differentiation in the era of digital freight,” is based on feedback from surveys Freightos conducted with roughly 70 freight forwarders, as well as interviews with senior executives at both enterprise and mid-size freight forwarders.

Freightos explained that it approached its research with a few underlying themes. One was how freight forwarding emphasizes service as a key differentiator and how forwarders usually refer to customer service such as exception management or physical services like cold chain. It also addressed forwarders’ adoption of technology like EDI, e-mail, and rate management tools to improve service levels, coupled with the rapid pace of logistics technology development subsequently resulting in freight digitization changing the industry.  

“Successful forwarders are looking for the service edge over their rivals,” said Dr. Zvi Schreiber, CEO and founder of Freightos, told LM. “That’s no different [than] how it has always been.  Freight Digitalization is inevitable. Prudent forwarders see this and are preparing for it, looking at what benefits it will bring.  Those forwarders intent on providing a good service have a lot to gain from digitalization. Far from the threat it was once perceived to be, it may in fact be their best bet for future proofing their business.”

That was made very clear with some of the report’s key findings, including:

• Although forwarding is largely manual today, in five years’ time 74% of forwarders believe it will be largely (but not completely) automated, just like personal banking is today;
• By “service differentiation”, forwarders mean customer service (77%)/seamless operations (63%), not scope of actual services. However, this won’t necessarily be personal touch - today 77% agree that personal touch is critical but believe that will decrease to 54% by 2022; and
• 57% of forwarders today believe that shippers are driven by price to choose forwarders today. By 2022, they believe that will decrease to 35%, while the importance of customer service in selection will grow from 11% to 28%

The report explained that digital-based customer service, which it likened to how it commonly is in personal banking, is a huge benefit for shippers, and forwarders, too, as they will “benefit, with plenty of scope to automate, strip costs, and free up employee time,” and serve as an opportunity to eliminate the dozens of calls spent on each shipment, or, as the report noted, 43% of freight sales teams spent on pricing.

As to where those freed-up resources would be allocated, 70% of respondents cited providing new services and winning more customers, 50% said offering a more personal touch would be a focus, and around 25% cited taking more costs out.

With commodization viewed as one of the biggest fears of freight digitalization, Freightos said the other is the impact of increasing transparency.

“Once shippers are able to calculate true value of customer service, hidden or unfair charges will become things of the past – while only forwarders that provide better all-round customer service will stay competitive,” the report said. “It will also become easier for shippers to identify better forwarders. When web-based ratings or comparisons become the norm, customers will seek out forwarders that truly deliver on their customer service promise. That’s not a bad thing. The better forwarders have always looked for ways to improve competitiveness, become more efficient, and respond to whatever challenges are facing the industry.”