Is this the beginning of the end for the freight forwarder..??


In response to the question Who is a Freight Forwarder, I explained that in the most succinct and layman terms, a Freight Forwarder maybe defined as a multi-function agent/operator who undertakes to handle the movement of goods from point to point on behalf of the cargo owner..

Simple enough description.. But when one reads what happens in a day in the life of a freight forwarder it may not be so simple..

In the recent months there is a big conversation going on about the impact of “digitalisation” and “disruption” of the shipping and freight industry, to the extent that some people are terming it as the beginning of the end for the freight forwarder..

Is it really so..?? Let’s put it in perspective and see..

Technology has touched every aspect of the human life and business.. Shipping and freight industry is no different and things have changed much from the days of vintage shipping and how it was done to how it is being done today..

In my opinion, the terming of technology and technological innovations as a “disruptor” in itself is a wrong concept.. I would much prefer to consider technology as an “enabler” than as a disruptor.. In fact the term disruptor itself is so new that the online dictionaries don’t seem to recognize it..

Each and every entity handling shipping and freight is exposed to some form of technology in their business, whether it is the standard and reliable Microsoft Office suites or complicated and high end ERP systems that some companies use..

beginning of the end for the freight forwarder

 

Technology has added value and will continue to add value to the shipping and freight industry.. Starting from how containerization shaped the modern world 60 years ago, to the evolution of various container size/types, to the advent of the mega ships currently, technology has enabled the industry to a large extent..

Recently Maersk Tankers used a drone to deliver a parcel to a vessel at mid sea as a test.. They plan to explore the possibilities of using such technology to safely and quickly deliver parcels such a spare parts without the ship having to come into the port for the same or a tug boat sailing out to meet the ship..

Using a drone for such activities saves the shipping line a substantial amount of money in comparison to using a tug boat which is also more harmful to the environment compared to a drone..

Similarly there are other technological advances such as fully automated port terminals (APM Terminal Maasvlakte II), Amazon’s proposed Airborne Fulfilment Center (a floating warehouse) capable of hovering 45,000 feet above your home and delivering cargo to you using drones, IoT (Internet of Things), Autonomous Ships, Online Freight Marketplaces, Freight Bench-marking services etc etc etc..

So does all this mean that this is the beginning of the end for the freight forwarder..??

NOT AT ALL..!!

A freight forwarder’s job does not only involve buying and selling of freight and arranging shipments.. While this is “one” of the many activities of a freight forwarder, this is in no way their “core” function..

In my opinion, the freight forwarder’s core function through which they really add value to their client, is to properly guide and advise their client on the requirements related to a shipment..

This includes, but not restricted to, providing guidance on

  • the process that needs to be followed to achieve optimum efficiency and effectiveness in transporting the cargo from point A to point B whether it is by sea, road, air or rail (yes a forwarder also deals in modes of transport other than sea)
  • the documentation that is required for the various cargoes that are being shipped  (for example some ports may require specific documentation in order for cargo to be discharged or transported – like a Cargo Tracking Note)
  • how the customer can save costs by using the most optimal method of transportation (for example using an LCL option for cargo that maybe less than 6 pallets etc)
  • how the cargo must be packed for safe and secure transportation
  • which cargoes are allowed or not allowed in which parts of the world or using which transhipment route (like Wine is not allowed to be transhipped via Jeddah port for example)




There are also other specialised fields within freight forwarding such as Project Forwarders and Reefer Forwarders etc who deal with specific types of cargoes.. These cargoes require specialist knowledge, know-how and expertise and cannot be entrusted to just about anyone..

Let us assume you are a forwarder who has been appointed to assist with the logistical requirements for setting up of a power plant at an obscure dot on the map in the middle of Zambia.. You as the project forwarder need to know and have complete information about the destination, the route and access to the destination, the best suited port for the arrival etc etc..

For example, Zambia is bordered by Tanzania on the East and Namibia and Angola on the West all 3 of which have active seaports.. Although one port might be closer to Zambia than the other in terms of distance, that port might not have the infrastructure and transport options to discharge and move this cargo into Zambia or the route from that port might not be the best and safest..

It becomes the job of the forwarder to ensure that these issues are checked, verified and considered before advising the customer on the best option.. It is local knowledge such as this, which will serve to be invaluable to the shipper, consignee or the project consultant who maybe sitting in other parts of the world..

It is knowledge such as this and human interaction at the various levels that can never be replicated by technology (at least in the near future).. There are no real technological alternatives currently that can replace a freight forwarder in all of the above mentioned cases..

So I would say that the role of a “traditional” freight forwarder or a “brick-and-mortar” freight forwarder (a recently developed term in some quarters to differentiate a traditional freight forwarder from a digital freight forwarder) is very much alive and well and still very much required in the shipping and freight industry..

Many traditional/global freight forwarders have been around for many decades and have come up with their own innovations within their own space and are seen to be well equipped to give this new breed of startups a run for their bitcoin.. 🙂

A sustainable long-term formula would be a strategic collaboration between the two parties which would allow the customers to access the traditional knowledge, know-how and expertise of the brick and mortar freight forwarder and the technological innovations of a digital freight forwarder..

It would also be interesting to see what happens when more “enablers” enter the fray inspired by the successes of the current startups..

beginning of the end for the freight forwarder


Image Credits :

  • https://thenounproject.com/grega.cresnar
  • https://thenounproject.com/kemesh
  • https://thenounproject.com/formbuero
  • https://thenounproject.com/korawan_m


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