Agility and the ability to adapt to difficult circumstances remains the No. 1 attribute for freight forwarders—but the pandemic put them to the test. Today, the leading forwarders are investing in technology that not only increases efficiency but also enhances operations and creates new global solutions.
Agility and the ability to adapt to difficult circumstances remains the No. 1 attribute for freight forwarders—but the pandemic put them to the test. Today, the leading forwarders are investing in technology that not only increases efficiency but also enhances operations and creates new global solutions.
All indicators point to continued challenges throughout 2021; however, Manners-Bell remains optimistic and maintains the market for forwarders is very positive. “Demand is exceptionally strong in North America and Europe,” he says. “Although there have been some signs that forwarders’ margins have been squeezed by high carrier rates and shipper push back, the lack of air and sea capacity has meant that those forwarders with the best access to capacity have prospered.”
In the meantime, Panjiva research indicates that the top 20 forwarders have built their market share as cargo owners shift to larger firms with more flexible solutions. “In total, the top 20 forwarders’ volumes climbed 46.3% year-over-year in January and February 2021 combined, though their aggregate share of total U.S. inbound shipments was still only 20.3%,” reports Panjiva.
The fourth quarter of 2020 was particularly good financially for the large freight forwarders who buy bulk spaces from carriers yearly, then sell them to customers throughout the year.
For example, XPO Logistics revenues increased some 12.8% during the fourth quarter of 2020 to $4.67 billion—the highest ever of any quarter in its history. Expeditors International reported a record 55% increase to $3.2 billion during that quarter compared to the same period 2019, while C.H. Robinson reported total revenues increased 19.9% to $4.5 billion.
Tech developments
Agility and the ability to adapt to difficult circumstances remains the No. 1 attribute for freight forwarders. The pandemic has put them to the test.
Forwarders are also increasingly investing in technology that not only increases efficiencies but enhances operations and creates new solutions.
“Digitalization is one of them, and the pandemic just cranked that up,” says Roberson. “Digital solutions help increase the real-time global visibility of transport services across end-to-end supply chains, and smarter solutions keep up with consistent changes.”
Today, most large freight forwarders have customer portals that aggregate huge sums of data for enhanced order and shipment visibility, improved shipment planning and inventory management, predictive analytics, and standardized systems and processes. “This helps shippers plan for supply chain disruptions and changes in carrier supply, which has been very volatile throughout the pandemic,” says Armstrong.
“When the global pandemic suddenly hit, our customers were able to stay connected with their vendors in a remote working environment with Navisphere POM,” says Mike Short, president of global forwarding at C.H. Robinson. “Our customers leveraged these capabilities to proactively minimize the impact of pandemic-related and other disruptions on their supply chains and to keep stakeholders informed on status, risk, cause, and responsibility.”
That ability to track and trace shipments also helps shippers mitigate the impact of bullwhip effects in the supply chain. “Greater visibility of potential disruptions upstream and downstream allows companies to speed up or divert some shipments as well as quickly resolve issues with suppliers and carriers,” says Manners-Bell.
Mapping out supplier networks is also essential to manage the potential risks to production and delivery schedules. “Systems that provide supply chain visibility and inventory velocity, not to mention acceleration, create the necessary agility to mitigate the impacts of pandemic disruption to the market,” adds Manners-Bell.
Using artificial intelligence and data mining, SeaExplorer provides shippers with realistic lead times for routings, service updates, up-to-date sailing schedules, and alternative departures for canceled sailings. It also provides detailed information on the CO2 emissions of each route.
DSV Panalpina introduced new track-and-trace capabilities and also implemented new robotic storage and retrieval systems in its warehouses to support e-commerce operations.
In collaboration with Verity, DSV Panalpina is implementing an autonomous drone system to better manage inventory at several warehouse operations. Operating mainly at night, the drone system can scan barcodes without human interaction and detect if pallet positions are empty or occupied. This supports cycle counting and overall inventory management.
Following the completion of a pilot phase, Hellmann will implement CargoWise across 42 countries including the U.S., Australia, Germany, UK, India, South Korea, South Africa and Hong Kong. Hellmann is also deploying a digital warehouse management system for a long-standing customer in Bor, Czech Republic, that leverages artificial intelligence to better manage the
customer’s material flows.
The myCEVA platform makes it possible for CEVA to offer value-added services like customs clearance, insurance, and environmentally friendly options. “Currently available for ocean freight, we envision this platform being a one-stop shop for all our customers including air, ground, and contract logistics by the end of 2021,” says Stewart.
For many forwarders, however, the challenge is how to advance in technology without losing the personal touch. To address this issue, CEVA Logistics has invested in customer relationship management (CRM) software to provide an omni-channel customer service platform to unify all customer communications into a single system—from traditional phone and e-mail to chat and social feeds.
“We have also invested in a Cloud contact center that leverages our existing voice channels to intelligently deliver customer communications to the right person, at the right time, the first time,” says Stewart. “Our goal is to deliver the exact answers right away.”
“Carriers will need to have clear value propositions to succeed because forwarders provide services beyond transport, such as end-to-end offerings and tailored solutions for customers,” says Mark Williams, associate partner at McKinsey & Co.
But there are hurdles for carriers in this sector, adds Williams. “Forwarders don’t idly sit by, and Amazon is full in.”