06 Apr Paperless Trade in Forwarding Can Save 40% Operational Cost
2020 and 2021 were tumultuous years for the logistics industry, with its effects naturally rippling through multiple sectors. The COVID-19 pandemic has created a climate of uncertainly for the freight forwarding industry and a perfect storm of challenges, including skyrocketing freight rates due to capacity crunches in supply chain networks; escalating demand for consumer goods and e-commerce; mounting port congestion and port closures; increasing container shortages due, in part, to abandoned cargo; and continuing factors such as illness among port and terminal operators, bad weather, and the Suez Canal being blocked for nearly a week.
Although there have been some signs that forwarders’ margins have been squeezed by high carrier rates and shipper push back. Agility and the ability to adapt to difficult circumstances remains the No. 1 attribute for freight forwarders. The pandemic has put them to the test.
Pandemic pushing the digitization lever
Forwarders are also increasingly investing in technology that not only increases efficiencies, but enhances operations and creates new solutions. Digitalization is one of them, and the pandemic just cranked that up. Digital solutions help increase real-time global visibility of transport services across end-to-end supply chains, and smarter solutions keep up with consistent changes.
Fortunately, their efforts are working, and they are cutting down nearly 40 percent of the operational costs, which a traditional Freight Forwarder adhering to manual paperwork will often stick to. This is not only enabling them to save cost, but also finding new opportunities to grow.
Today, modern forwarding software have customer portals that aggregate huge sums of data for enhanced order and shipment visibility, improved shipment planning and inventory management, predictive analytics and standardized systems and processes. This helps shippers plan for supply chain disruptions and changes in carrier supply, which has been very volatile throughout the pandemic.
SaaS based systems are made available to small-mid size enterprises so that technology penetration is across the supply chain irrespective of size. SaaS models are pocket friendly but do deliver the same scale of benefits like full fledge systems.
Sustainability is another parameter where freight forwarders are putting their bets. They are looking at solutions which are sustainable and resilient in nature. So paperless transactions, digital operations, and innovations that add shareholder value are making strong in-roads.
Reluctance Among Forwarders to Embrace Digitization
While a large chunk of Forwarders chooses to disrupt with digitization, some are still hesitant. We see Freight Forwarders in several geographies worldwide are reluctant to go digital for the sake of data security and high investment cost. Mostly, small, and medium freight forwarders account for this population. Experts suggest that by choosing the right IT solutions provider, they can ensure data security and save on the investment cost.
The Way Ahead
Yes, the future looks digitized and that is the new normal the world has been waiting for. But is it enough to survive another uncertainty? The answer to this lies on the widespread adoption of digitization.