By Joe Braue
Traditionally, SMEs that needed to ship freight overseas could face huge headaches. From difficulty in understanding a complex freight-forwarding process to a lack of transparency in pricing, they often had to contend with a time-consuming legacy process driven by paper and faxes to pick the right global freight forwarder and carrier, which could lead to overpayment.
But starting several years ago, digitization entered the supply-chain management picture. That spurred creation of freight forwarding marketplaces, such as Freightos and NYSHEX. These companies aim to make the process of selecting the best option to forward freight similar to using online travel marketplaces to pick the best flight, real estate sites to buy a home, or auto marketplaces to get a car. While more complex than consumer transactions, freight forwarding marketplaces offer a similar digital experience.
Freightos provides a typical example of how a freight marketplace works.1 An SME seeking to ship goods overseas goes to the online marketplace and inputs information about its shipment (cargo type, weight, number of units, and dimensions), origin and destination details, and whether it needs services such as insurance and customs clearance. The marketplace automatically searches and comes back with options from freight forwarders that meet the company’s criteria. Exporters and importers click on the freight forwarder they want, and then pay with a credit card or money order. The marketplace tracks shipments to their destinations so customers can monitor progress of their goods
In a real-life example, for Code&Quill, an Austin, Texas-based manufacturer of boutique notebooks and planners, finding and placing an order with a freight forwarder was typically a two-day process. Using Freightos, Code&Quill was not only able to easily find a freight forwarder without knowing technical freight jargon, it also was able to create a process that could be duplicated for future shipments, at prices substantially less expensive than what it had been paying previously.2
For larger companies seeking to secure and lock in larger shipments because of time-definite or sequenced cargo flows, NYSHEX offers the ability to guarantee capacity and rates two to six months in advance, as well as the transparency of being able to choose from various carriers.
This has proved advantageous for Tin Box Co., a Farmingdale, N.Y.-based wholesaler with manufacturing facilities in China, that sells seasonal consumer products with a short shelf life to large retailers. According to Michael Siegel, Tin Box’s vice president of imports, the company has been able to save $300 to $400 per container compared with previous container pricing options. If this keeps up, Siegel estimates the company will save close to 11 percent on ocean freight this year.3
Online freight forwarding marketplaces represent the first phase of global shipping digitization, which includes automated rate comparison, booking, tracking, and management of freight. These are the global shipping basics, and attract small and midsize shippers, freight forwarders, and logistics providers.4
But global freight forwarding marketplaces have some drawbacks. According to Tata Consultancy Services, the service quality of chosen carriers can be unsatisfactory, and quotes offered are typically standardized when many shippers need customized rates that change with demand and supply. Further, the amount of value-added services available is lacking, and 100 percent end-to-end visibility into freight movement across the globe may not be assured.5
At the same time, digitization, advances in technology, and mergers and acquisitions are continuing to blur the line between marketplaces, freight forwarders, and carriers. For example, one digital freight forwarder has added end-to-end international freight shipping services, including instant rates, instant booking, freight management, and delivery. In fact, as freight forwarders’ digitization efforts continue, some are surpassing online freight marketplaces with deeper and more robust service offerings, the use of advanced technology, such as artificial intelligence and machine learning, and better live customer support.6
Experts expect marketplaces to continue to use technology to advance their services. Tata suggests they could migrate to a blockchain-powered platform, which could offer end-to-end integrity across functions, such as track and trace, ratings, invoice audits, and feedback.
“By driving efficiencies through better data insights, reduced operating costs, increased potential customers, and streamlined operations, freight marketplaces will soon become the norm for the logistics industry,” Tata says.7
Just like online travel marketplaces have simplified the process of finding and buying the best-priced airline tickets, freight forwarding marketplaces have made global shipping faster, more transparent, and more cost-effective, especially for SMEs that don’t have time to become global freight forwarding experts. Part of a general digitization initiative across the entire global supply chain, freight forwarding marketplaces are expected to adopt new technologies and offer more comprehensive solutions in the future.
For more than 20 years Joe Braue has been a writer, editor, and media executive involved in the creation of award-winning technology content, including articles, research, events, and videos.
1.“Smooth Shipping: Using the Freightos Marketplace,” Freightos; https://www.youtube.com/watch?v=a1SpKrevclA
2. “Code&Quill’s 21st Century Solution to an Age Old Problem,” Freightos; https://www.freightos.com/case-studies/codeandquill/
3. “The Tin Box Company,” NYSHEX; https://info.nyshex.com/case-study-the-tin-box-company?hsCtaTracking=68be0164-9aea-4eaa-a5d8-6eac38458e84%7C7cde3b28-60d6-41e2-94bd-9f90185f0efc
4. “Are Online Freight Marketplaces Replacing Forwarders,” Logistics Trends and Insights; https://logisticstrendsandinsights.com/are-online-freight-marketplaces-replacing-forwarders/
5. “Technology-led Disruptive Freight Marketplaces – The Future of the Logistics Industry,” Tata Consulting Services; https://www.tcs.com/content/dam/tcs/pdf/Industries/travel-and-hospitality/Building-Disruptive-Freight-Marketplaces.pdf