BEWARE OF DIGITAL FREIGHT FORWARDERS LIKE FLEXPORT AND CARGOWISE
Eastman Kodak once dominated the photographic paper business, but unfortunately failed to see the impact of digital cameras. Even though it took several years for the technology to improve enough to take over the industry, Kodak was looking the wrong way. Let's also not forget the disappearance of travel agents in the mid-nineties.
In these cases, there were ample warnings, yet they were ignored. These companies didn't act on what they saw, despite noticing they were being outflanked.
Independent Freight Forwarders are being outflanked right now, and very few seem to notice.
By now, most of us know about Flexport and that they’re coming for our clients. They have been on a rampant trajectory since their founding in 2013. By 2016, Flexport had over 600 customers and has grown 30% a month for the next 30 months. In 2018 it was the 8th fastest growing business in the United States, with a three-year growth rate of 15,911%. They have raised over 1 billion dollars in funding, with well over a thousand employees, and 25 offices and warehouses around the world.
Unfortunately, they are not the only ones. There is a new breed of digital freight forwarders on a mission to digitize global forwarding and logistics. They sell transparency and efficiency over the traditional forwarding approach, and they are very effectively outflanking traditional forwarders by the droves.
There is no shortage of digital freight forwarding platforms out there, Cargowise being another popular example. They have done very well upgrading forwarder systems, embracing technology, and improving data interchange.
We are hearing requests from Independent Freight Forwarders, more and more, for a killer platform that will compete with Flexport. But, it’s not really about the software.
Traditional independent freight forwarders spend an inordinate amount of time focused on competing on transactional rates to confirm their value to their clients. Big, well-funded digital operators like Freightos and others are leading this effort. But this isn't what it's all about.
Flexport's success is not so much about digital freight forwarding, as it is about revolutionizing the whole supply chain industry. Flexport says, “with Data Comes Change”. So, it’s not just about transparency as much as it’s about capturing structured data across the platform, “...to allow for richer analysis and better business planning” In short, Flexport is using supply data to drive supply chain optimization as a differentiator and sales strategy. I recommend reading Flexport's white paper called, “From Chaos to Control: Optimizing Global Trade with Data” for more information on how data is chaining the supply chain industry
Flexport is telling Independent Forwarders how they are coming for their clients on their client page. Pay very close attention, because if you don’t give this a good look, you’ll end up outflanked. Flexport is offering everything an independent freight forwarder is offering including efficient freight forwarding and decent rates, and maybe even better information. But they are focusing on and successfully delivering data driven optimization, across the whole supply chain, creating efficiencies and savings that rates and service alone can’t compete with. Let’s see, save $200 on a container versus saving thousands in better planning and execution. Who wins?
Independent freight forwarders must raise their game to the next level in terms of being supply chain consultants and solution providers. And they need to start now. The only way they can head off Flexport, is to compete with them at their own game, thus closing the door on the need for them in the first place.
While Flexport is big and still growing, independent forwarders should leverage their smaller size and be able to react and offer recommendations much quicker. They certainly have the expertise, if applied correctly.
Data doesn’t always tell the entire story. Independent forwarders are often closer to their clients and vendors, bringing personalized, quick, and creative solutions beyond what data can offer.
Independent freight forwarders can also leverage the power of strong relationships with their counterpart agents who have local expertise and can often local options to help compete with the new players in the industry.
Don't know where to start? In our international forwarding networks, GLOBALINK NETWORK and GLOBAL VALUE NETWORK, we’ve proven over 20+ years that good relationships build good business. It's now more important than ever to leverage these relationships.
In our networks, we work with members to focus on this new consultative approach to optimizing client supply chains. We roll out sales strategies and approaches for members to build new business and maintain happy customers.
If you don't act fast, Flexport, Cargowise, Freightos, and many others will steal your business and transform the industry for good.