Does the freight forwarder market need a marketplace?

Digital marketplaces have been operating in logistics and the freight forwarding business for years. Among the very wide offer that exists around the digitalization of companies in this sector, these platforms that bring together shippers with transport demand and freight forwarding companies that bid to offer their services continue to become popular. 

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The model they use is a replica of that of generalist marketplaces, changing the role of the actors. The buyer of Amazon becomes the shipper looking for transportation, while the seller is the freight forwarder and, in many cases, also many other providers of logistics and transportation services. 

 

The idea may seem like a win-win: it is presented to shippers as a faster and more efficient transport contracting process, and above all cheaper, with access to a very wide range of transport services. For their part, freight forwarders achieve with these platforms an immediate jump to some advantages associated with digitalization and the opportunity to find new clients. 

 

The procedure also seems simple. In the same way that a buyer searches online for the best price to buy an everyday product, the shipper quotes the route from port A to port B and selects the cheapest option. Everything seems perfect. In fact, the model can be useful for certain highly standardized routes and types of merchandise.  

 

However, the problem with these marketplaces is that they start from a misconception of the activity carried out by freight forwarders. He Freight transportation and supply chain management is much more complex than buying an everyday item. The freight forwarder's reason for being is, in fact, to exercise the role of architect of the entire transport chain so that each link connects with the next: organize the collection of the merchandise, manage customs clearance, storage, reservation of space with the shipping company, and a long list of operations to guarantee the success of any shipment. 

 

Furthermore, the freight forwarder is not an intermediary.. It is a trusted partner of shippers, a long-term relationship based on mutual knowledge, in which the freight forwarder is a proactive actor in the search for logistical efficiencies, who is specialized in the activities of his clients, who provides added value. to their traffic and merchandise. All this accumulated baggage blows up in a model like that of the marketplaces, in which the freight forwarders can be replaced at any time by the shipper, because the price ends up constituting the decisive variable in this contracting model.    

 

There is another element that catches my attention about the marketplaces and that they repeat very frequently in their speech: “We are not here to replace freight forwarders.” Maybe that's true, but the truth is that they don't need it either. What interests them, and what they are doing, is to take over the market directly, directly bringing together the clients of the freight forwarders, the shippers. 

 

I am not predicting anything new, because it is a strategy that is already designed and implemented by players that operate in other sectors. Reaching a significant volume of demand allows supply to be controlled and freight forwarders will be forced to fight with falling prices to continue in a business that will provide less and less added value. 

 

From Freightol, like other companies specialized in software for freight forwarders, we propose a different model. We propose the individual digitalization of freight forwarding companies, without participating in the market or interfering with their clients. 

 

We understand digitalization as a competitive advantage for your daily operations, with countless benefits that have a transversal impact on your business, and our objective is that this technological development adds potential to your experience and your knowledge. We believe that digitalization has not come to reinvent either the market or the freight forwarding profession, but rather to help them use new tools that will streamline the most standardized procedures and will allow them to focus on the tasks in which they provide greater added value. 

 

It is time for the freight forwarding group to consider the risk that the growth of these marketplaces may pose, in the same way that it has detected the threat posed by the growth of shipping companies in new niches of the logistics business. Let's ask ourselves: What digitalization model do we want for the freight forwarding sector? The result of this response will be key to defining the future of this market. 

 

At Freightol we have developed a questionnaire to help freight forwarding companies know which digitalization model is most appropriate for each business. We invite you to complete a quick questionnaire to guide you on the path to digitalization. 

 

 Jaume Archidona, CEO of Freightol