September 29, 2020

The Impact of Digitalization on Freight Forwarders

Digital technologies have changed the face of the freight forwarding industry. Streamlining supply chain methodologies and reducing human interventions have made transportation more efficient. The logistics industry is becoming increasingly dynamic and uncertain and a resilient supply chain is the need of the hour. With digital platforms working towards agile and transparent supply chains, the question is whether freight forwarders can cope with these challenges.

The Driver’s Seat

Forwarders are the middlemen who coordinate between carriers and shippers and are key to the business of moving cargo. They neither own their own aircraft or vessel but can handle everything from customs clearance and export and import documentation to packing, warehousing and insurance. They are in the driver’s seat for moving cargo and are very crucial to the global economy; but with the emergence of digital technologies that reduce human interventions, their importance is questioned.

Airlines & Freight Forwarders

Cargo airlines and freight forwarders have a very close connection, with forwarders comprising almost 90% of the airlines’ customers. With many online booking portals directly connecting the customer with the airline companies, many expect the carriers to push shipper-airline bookings. But can airlines eliminate freight forwarders and directly deal with shippers? Won’t it compromise the airlines' equations with their current customer base? The airfreight market is dynamic and is quickly influenced by movements in the supply and demand for space. It is a challenge to try and keep up with the changes in the market.

Freight Forwarder’s Role

In the past few years, the freight forwarder’s role has been under the scanner. Some feel that digitalization could be the end of the middleman. However, forwarders feel that the business of moving cargo cannot be completely digitalized and while automating procedures will make it more efficient, the processes will not be able to move smoothly without human interaction. The introduction of digital solutions for movement of cargo ensures that standard processes are automated and augmented, and the possibility of human input error is reduced. This means that to stay in the equation, freight forwarders will have to up their capabilities and move to digitalize their operations and work towards an agile and transparent supply chain.

Meeting Customer Demands

Customer is the most important variable in any shipment and meeting their needs and expectations require expertise, resources and the need to maintain relationships. With the end-to-end supply chain continuing to evolve, customer demands are also changing. Today, customers demand additional value-added services like cargo pickup, delivery, insurance, banking, customs clearance, and document handling. Technology is just one piece of airfreight shipping and will aid the overall operations through improved reliability, higher efficiency and faster response times. This will benefit not just the customer but also help to maintain a sustainable airfreight business. Freight forwarders are here to stay as they have a value in the freight market that cannot be replaced with technology. The freight industry has a need for the human factor, experience and expertise and end-to-end solutions offered by forwarders and digitalizing these operations will just ensure that the processes are streamlined and more efficient.