Picture an exasperated exporter desperately seeking the most cost-effective shipping solution for a batch of goods about to depart. After contacting multiple freight forwarding companies, they find themselves waiting endlessly for delayed quotations. This inefficient, time-consuming scenario remains an unfortunate reality in international freight forwarding, despite digital transformation sweeping through other industries.
While new digital-forward freight companies have emerged to challenge traditional models, surprisingly, large traditional freight forwarders with substantial resources have not matched their scale with digital transformation speed. Their slow adoption of new technologies and online service optimization has left the industry lagging.
Online Quoting: The Litmus Test of Digital Transformation
A recent Freightos annual survey serves as a mirror reflecting critical issues in the international freight forwarding industry's digital transformation journey, particularly the lack of online quoting capabilities. The report not only exposes traditional forwarders' digital shortcomings but also prompts deeper reflection about the industry's future direction.
The anonymous survey focused on the world's top 20 freight forwarders, evaluating their online quoting processes through simulated real-world scenarios. Researchers posed as exporters attempting to obtain quotes through these companies' online tools while documenting the experience.
The results proved surprising and disappointing: among these 20 leading companies, only Kuehne + Nagel could provide instant quotes through its online tool. The overwhelming majority still relied on manual quoting methods, failing to meet customer demands for fast, convenient online services.
The survey's rigor showed in its multidimensional evaluation criteria, assessing not just online tool functionality (form functionality, user interface) but also response speed (time to quote) and follow-up quality (whether specialists followed up promptly).
Only 9 of the 20 companies passed all three "online obstacles" to eventually provide quotes. More concerning, 25% couldn't even offer a functioning online form, preventing customers from submitting inquiries digitally.
Compared to a similar 2015 survey, while technical aspects showed slight improvement (better form functionality), response times significantly worsened – increasing from an average 7 hours to 15 hours in 2016. This suggests that despite digital investments (website upgrades, online features), efficiency gains remain elusive, even regressing.
This efficiency decline may stem from multiple factors: over-reliance on manual reviews creating cumbersome quoting processes, or poor integration between online and internal systems causing data transmission bottlenecks.
Digital Transformation: The Gap Between Intent and Reality
With new entrants promoting fast, efficient online freight services, traditional forwarders face unprecedented competitive pressure. These digital-native companies leverage internet technologies to streamline processes and attract price-sensitive, efficiency-focused clients.
Some question whether digital tools might eventually replace traditional forwarders entirely, with radical views suggesting legacy players could become obsolete as digitally-adept companies dominate.
Yet Freightos's report shows even resource-rich industry leaders struggle with digital transformation, contrary to expectations. This isn't due to ignoring digital trends or resisting technology, but rather managing competing priorities: balancing short-term profits with long-term development, allocating resources between existing and emerging businesses, and weighing innovation against risk control.
Kuehne + Nagel CEO Detlef Trefzger stated: "We don't see digitization as disruption, but as part of our continuous business development." This reflects traditional forwarders' measured approach – viewing digital not as threat but opportunity to enhance efficiency, expand business, and strengthen competitiveness.
Indeed, a previous Freightos report showed 62% of forwarders consider online pricing digitization an opportunity, while only 15% see it as competitive threat. Most recognize online pricing's value and willingness to experiment with new technologies.
So why does industry-wide digital transformation progress so slowly? Why do powerful traditional forwarders remain digitally cautious?
Root Causes of Transformation Lag
Understanding international freight forwarding's digital delay requires examining industry characteristics, client needs, and technical challenges.
A key factor: small-to-medium shippers haven't demanded digital solutions strongly. While digital tools improve efficiency and reduce costs, not all clients prioritize these benefits. Many prefer personal relationships with forwarders over purely online interactions.
In the U.S., companies with under 500 employees manage about one-third of imports while constituting 97% of importers. These small-to-medium enterprises often value personalized service and flexible solutions over price competition alone, preferring familiar representatives to standardized online platforms.
Moreover, international freight's complexity heightens digital transformation difficulty. Compared to domestic shipping, international involves more steps, participants, and regulations – customs clearance, inspections, quarantines require expertise challenging to automate fully.
Converting unstructured form data into structured, actionable information demands significant time and resources, making large forwarders reluctant to invest heavily. For example, automating quotes requires complex algorithms to recognize, parse, and standardize varied client inputs – cargo descriptions (e.g., "electronics" vs. "smartphones"), address formats (U.S. vs. Chinese conventions), and special requirements.
Opportunities and Challenges: Who Will Prevail?
Despite challenges, most forwarders view online booking as opportunity – recognizing potential efficiency gains, cost reductions, client base expansion, and competitive enhancement.
The critical question becomes: when does ignoring digital transformation shift from opportunity cost to market share loss? When must forwarders commit seriously to avoid being outpaced?
As global trade grows, so do client expectations. E-commerce's rise means more customers expect online booking, tracking, and management – wanting real-time cargo status updates and quick quotes/solutions.
Retailers' evolving warehouse provider requirements illustrate this shift. As consumers demand faster delivery, retailers expect greater efficiency, flexibility, and technology from logistics partners – leaving laggards vulnerable.
In increasingly competitive markets, manual processes become unsustainable. Forwarders must leverage digital technologies to optimize operations, improve service efficiency, reduce costs, and enhance customer experience.
While international freight forwarding may remain in digital transformation's early stages, change is inevitable. Companies embracing digitization first – optimizing online services and improving customer experience – will gain competitive advantage. Those clinging to traditional models risk obsolescence.
Digital transformation represents more than technological upgrade; it requires fundamental mindset shifts, compelling forwarders to re-examine their positioning and value propositions to meet evolving market demands – understanding client needs and leveraging digital tools to deliver superior service.
Key Elements of Digital Transformation
Successful digital transformation requires focus on several critical elements:
- Building efficient online quoting systems: Fast, accurate, transparent online quotes prove essential for attracting clients and boosting efficiency. Forwarders must invest in developing or adopting advanced quoting tools while continuously refining algorithms for accuracy and speed. Systems must handle complex shipping scenarios (diverse cargo types, transport modes, destinations) and automatically adjust pricing to remain competitive.
- Optimizing customer experience: Digital transformation extends beyond technology to customer experience. Forwarders must understand client needs, offer personalized service, and provide convenient online query, tracking, and communication functions to enhance satisfaction – including real-time cargo tracking and online/video communication with representatives. Data analytics can identify client preferences for customized solutions.
- Strengthening data management and analytics: Digital transformation generates vast data requiring robust management systems. Forwarders must utilize analytical tools to uncover business opportunities, optimize operations, and improve decision-making – analyzing route costs/times to select optimal solutions or predicting market demand for proactive preparation.
- Cultivating digital talent: Transformation requires skilled personnel. Forwarders must enhance employee training, upgrade digital skills, and recruit digitally-proficient talent to support transformation – including data scientists, software engineers, and UX designers to develop/maintain digital platforms.
- Embracing innovation proactively: With digital technologies evolving rapidly, forwarders must maintain openness to innovation, experimenting with new technologies and business models to strengthen competitiveness – exploring blockchain for supply chain transparency/security or AI for process automation.
Conclusion: The Time for Digital Transformation Is Now
International freight forwarding stands at a critical juncture. Digital transformation has transitioned from option to necessity. Forwarders seizing this opportunity through proactive digital adoption will gain competitive advantage and market share, while slow-moving traditionalists risk obsolescence.
In this era of challenge and opportunity, forwarders must assess situations accurately and act decisively to secure future competitiveness – re-evaluating business models, understanding client needs, and leveraging digital technologies to deliver superior service. Only through such commitment can they survive and thrive in intensifying market competition.
Digital transformation represents a long-term, demanding endeavor requiring sustained effort and investment. Yet through perseverance and innovation, forwarders can achieve successful transformation and secure future market success.