Freight forwarding is now one of the most important business areas when it comes to keeping the world connected in terms of cargo and trade. But before we dive into its importance and the impact of digitization on the freight forwarding business model, it is important that we understand what exactly is meant by freight forwarding. In simple understandable terms, freight forwarders are middlemen who act as the connection between the shippers and the shipping vessel companies. The forwarder keeps in mind the needs and requirements of the shipper and assists in narrowing down on the best-suited shipping company matching the needs of the shipper.
Now coming to the recent upcoming trend of online freight forwarding platforms, the industry has seen a tremendous change in the way the businesses are carried out. In traditional methods, the business model of freight forwarding revolved around phones, fax machines, and person-to-person interactions. However now, most of the forwarders have started adopting the online platforms for various activities like communications, presentation of quotes, creating collaborative online business networks, and much more. Moreover, the shipping industry is now taking the next step in technology by analyzing and adopting the popular Block Chain technology in managing documentation in logistics. Another change that has been witnessed since digitization of ocean freight forwarding is the freedom available to the shippers to select their shipping company and vessel from the multiple options provided by the forwarder. Unlike the traditional methods where the forwarder only a had a few contacts and promoted the same to the shipper, the online mode has brought about a positive change in the business model by enabling the shipper to pick the right option from amongst the multiple choices present before him. In simpler terms, the situation now is that of an elaborate platter of multiple dishes to choose from as compared to a fixed menu of limited dishes.
In the coming few years, it is expected that more and more forwarders, as well as their business partners in the forms of shippers and shipping vessels, will begin shifting to the online platforms to acknowledge its various benefits including transparency and efficiency in dealings. There are basically three to four types of Online freight forwarding which are being developed at present and they are:
- Regular old Freight forwarders creating a digital platform and providing the same old services with help of technology online.
- Highly tech-enabled new freight forwarders providing almost all services online with ease to do business.
- New tech-enabled digital forwarding service providers acting as virtual forwarders on the front end with the support of few other regular freight forwarders at the backend.
- Digital online platform providing a marketplace for freight forwarding wherein Shipper on one side create a query for freight required (demand) and forwarder across revert with quotes as supply.
In the current scenario, there are still many industry experts who seem hesitant in expressing their faith over the digital medium, but it is also a fact that the majority believes that digitalization is the way forward. Time will tell which of the above four will excel or will all run together with sharp competition, we will have to wait and see.