In the past, the most talk-about in the world of logistics and freight forwarding are network, infrastructure, warehouse and trucks. Before the arrival of Flexport, freight forwarding industry has never appeared or mentioned anywhere near VC investors, not to say attracting big investment funds.
After series D, Flexport is now at a valuation of 1.5 Billion, almost a tenth of Kuehne & Nagel market cap as per 2018 year-end closing, even though there is a significant gap between revenue of the two with 224.7 million and 18.59 billion respectively in year 2017 disclosure.
For years, in ecommerce or digital world we are educated to “find the niche”, however, in the world of logistics where all services are fulfilled through network and infrastructure built-up, everybody seems to be competing on service efficiency and cost, and having products very much alike from one to another, where are the niches?
Looking at Flexport through traditional perspective, there is rarely any mention on the network, warehouse, trucks etc that we traditional forwarders reply on, however, if we are following online marketplace perspective, the “niche” in freight forwarding might probably be referring to technology and automation, data and SEO&SEM.
Base on our practical point of views, there are 2 main areas that traditional forwarder could learn from their counterpart from the digital side, and to improve its competence;
Leads generations and Customer acquisition
Traditional freight forwarder acquire customers in a proactive way through standard interface;
Business email
Phone conversation
Business meeting
In this standard interface, trainings and sales tool provided to sales personnel are of crucial importance, which are the essentials used to explain to customer from A-Z in limited meeting opportunities. Moreover, due to geographical and resources constraint, most of the time the business development campaign is limited to a local or regional level, by visiting customer one by one.
For a digital forwarder, there is an apparent co-existence of proactive and passive approach in acquiring new customers. Besides standard interface and with technology advantage, there is a possibility to run massive digital campaign globally, through SEO (search engine optimization) and SEM (search engine marketing) which eventually reach out to all potential customer, and active exposure through on-line media that consistently enhance the perception of product and service.
By analyzing feedbacks and data from the campaign, a digital forwarder understands what their potential customers are looking for and is able to concentrate its resources to answer to the real needs (pain points), in batch instead of one by one.
Streamline, transparency and visibility
Due to the number of suppliers in fulfilling international transportation (cargo agent, trucker, warehousing etc), a lot of documents and papers are being used to communicate in shipping arrangement, i.e. booking confirmation, shipping order, shipping instruction, container receiving voucher, Delivery order etc. These documents are passed from one party to another along with movement of goods, higher chance of service issue due to human error and it is difficult to make end-to-end real time tracking happen.
On digital platform, there seemed to be one clear end-to-end operational flow that keeps all the shipment info, where customer will always be notified on the process and could easily keep track of their respective shipment, a closed-loop information circle in order fulfillment.
Digital process shall greatly improve working efficiency.
Going further
More business are moving online, with new generation entering the field and more digital marketplace created on a global scale, big traditional forwarders are on the move to cope with the development;
Kuehne & nagel launched their portal Logindex
Geodis ran IRIS
Agility’s shipafreight, an online booking site
So is Damco’s Twill
For small and medium size freight forwarder, the competitiveness will be largely depends on the ability to
Expand customer base and portfolio in both conventional and digital way
Improve service satisfaction and working efficiency
International network development for end-to-end solution
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