Technology Usage In Freight Forwarding Industry

Vinod Raju, HEAD-IT & Enterprise Applications, EFL (Expo Freight)Vinod is a senior professional with 27 years of work experience in varied areas of Information Technology ranging from heading the IT in Logistics to Software Application Design & Development, and IT Infrastructure Management.

If I may be permitted to say, the Freight Forwarding business is the `underbelly' in the entire Supply Chain `Eco System' and technology adoption was never high on the agenda for forwarding companies. Traditionally it did not take too much of an investment to set up a forwarding company. All that was required was a table, a telephone and good contacts with the Shipping & Airlines. Entry into this field was very easy and not before long there were hundreds of forwarders competing for the same space resulting in the inevitable dwindling of profit margins of all players, large and small.

As expected, companies began to look at reducing costs and increasing market share to improve profitability. One way of reducing costs was by improving process efficiencies. This meant being able to handle more business without a significant increase in personnel & overhead costs. And the best way to increase market share was to provide efficient processes and consistency in good service to the customer. Not before long did most forwarding companies realize that this combination could only be achieved with the help of robust IT systems. Hence, they started implementing software solutions to automate many processes such as Air Waybill (AWB) & Bills of Lading (BL) creation. This instantly reduced the documentation time taken for shipment processing.

Very soon a majority of forwarders started using locally or `in-house' developed solutions for their operating and accounting needs. As usage of Information Technology increased in this industry so did standardization of in-formation exchanged between entities in the entire trans-action (shipping lines & airlines, overseas counterparts, shippers & consignees etc.)

With continuous improvements in technology such as Electronic Data Interchange (EDI) & Web portals, the Shipping & Airlines too found an easier automated method of receiving AWBs & BLs and space booking by forwarders on the liners. In addition to improving the efficiencies of Airlines & Shipping
lines, this electronic collaboration also ensured forwarders kept up with technology as carriers began to incentivize usage of electronically filing documents (AWBs & BLs) with them. A big benefit for carriers was that information received electronically did not have to be re-entered into their systems thereby improving their process efficiencies too. This also resulted in standardization of information being exchanged between carriers and forwarders.

By its very nature, in the Freight Forwarding business, the forwarding company at the origin country generally (on most occasions) needs to deal with another forwarding company at the destination country. The information being entered at origin and destination were basically two sides of the same coin. With more & more standardization coming into the industry and the maturing of EDI technologies, it became possible to move information between software applications across countries. This further improved the efficiency of forwarders who did not need to re-enter information received from the origin. With this standardization and the ability to easily exchange information amongst the various entities, a customer could now track shipments from origin to destination. The track & trace service become a huge competitive advantage for forwarders. Now the track & trace of shipments is a default service that is expected by customers.

The next big technology improvement relevant to the forwarding industry in general has been the introduction of Cloud services (hosted solutions). As with all new technologies, the for-warding community (barring a few initial adopters) was cautious about accepting this service. Freight for-warding software solution providers have seen this technology innovation as a great opportunity to expand their markets beyond the localized users. Soon the forwarding Software Solutions providers started offering hosted software solutions to the global market in a SaaS (Software as a Service) model. With the maturing of the SaaS model, forwarding companies have begun to see the benefits in this approach.

Like hosted solutions another technology that has great potential to help forwarders offer excellence in their service levels to its customers are the RFID & GPS technologies. This is fast becoming very popular with forwarding companies. The tracking & tracing of shipments has gone through a `sea change' thanks to the technology innovation of RFIDs and GPS.

RFIDs tagged to containers on a ship, with the use of GPS, has the potential of actually giving customers real-time visibility on the whereabouts of their shipments. This information, for manufacturers, retailers, warehouses is invaluable for stock management, replenishment and many more.

The next big technology to be embraced by the for-warding industry, in my opinion, will be data analytics using AI. There is so much of information (structured & non- structured) available now, that it will be possible for even small & medium forwarders to start predicting peak loads of customers and the seasonality of their business. With such valuable information forwarders can customize solutions for their privileged customers thereby ensuring customer retention and increasing profitability.

The blockchain technology is just about beginning to be explored by technology driven forwarders. But it will take a couple years before the usage of this technology becomes common place amongst medium and small forwarding companies. As time goes by more & more forwarders will start embracing newer technologies quicker as they find more benefits to them and who knows. Perhaps in the future forwarders may be at the forefront of new technology adoption vis-a-vis other industries.