Here’s Why Freight Forwarders, Who Do Not Use Technology, Will Lose Customers

Learn to Love Tech (Credit: iStockPhoto)

While it seems like most industries are adopting technology at a rapid pace, the logistics industry has gotten a reputation for being slow to do so. There’s a perception, real or not, that many logistics service providers are hesitant to embrace automation and are still using manual processes unnecessarily.

This is especially true for the freight forwarding market. Here, many providers are falling behind their larger competitors by not embracing internet-based solutions to become more cost-effective in their operations and provide better and more convenient service to their customers.

These are companies ignoring a very important trend in the forwarding industry. It is that technology is becoming increasingly important to freight forwarders’ customers. For example, a study by Xeneta found that 65% of those surveyed said technology is a differentiator while another 30% felt that it will be in 5 years. Real-time tracking and booking are two advances that are critical for forwarders to provide to their clients.

Benefits of Technology

Leading freight forwarders have come to realize that the benefits of digitization and automating processes have many pay-offs.

For one, technology enables forwarding companies to create a more efficient operation and the ability to offer better service to customers. An online portal, for example, makes rates and other data more accessible which lowers operating costs. The customer, in turn, is happy by having access to more
accurate information — as well as the ability to book loads 24/7 with less need for support.

While low rates are an important part of what brings a freight forwarder business, it’s not the only factor. Competing on price is not a long-term strategy, but a reputation for faster and better service is.
Offering customers superior service and increased interaction through technology will create more “stickiness” in the relationship and serve as an important differentiator.

Carriers find forwarders who use technology easier to work with as shipment coordination is simpler and more reliable. Because it takes less time to provide service, carriers will offer these logistics providers lower rates that can be passed on to customers, or improve margins. For example, when
tracking information can be shared electronically it cuts down on calls to the carrier’s customer service team for ETA’s or POD’s. This is a benefit to the carrier, forwarder, and customer.

A paperless environment saves time and money, too. Documentation such as Bills of Lading or customs documentation can be digitized which cuts down on paperwork and makes it more accessible. Digital documents are also more accurate when they can be created by pulling data from a system and are not
rekeyed manually.

Similarly, forwarders can be more confident that their customer quotes are accurate with an integrated platform. International shipments are especially difficult to quote accurately, but using technology helps to create a central rate database that is easier to maintain. The downsides to a bad or incorrect quote are self-evident.

Technology can also enable quicker quoting for customers — again improving service where it really matters.

Two of the biggest challenges for freight forwarders are to stop being treated like a commodity and to constantly compete on price. Technology, when it is implemented correctly, provides a fast way to stand out from the crowd with truly better service and more efficient internal operations.


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