Between 2013 and 2016, a number of digital forwarders, online freight booking marketplaces and spot market platforms emerged, prompting a debate about the viability of the traditional forwarding model in the digital age. When this new breed of technology-enabled start-ups first entered the freight forwarding market, there was a general perception among the captive forwarders that the new entrants only had limited potential to disrupt the industry.
However, fast forward a few years and it appears these digital start-ups have quickly adapted their business models and brought their digital service offerings to the level of sophistication customers are expecting. This has resulted in the most prominent digital forwarders now being able to provide shippers and carriers with full supply chain visibility and value-added services.
Competitive landscape of the digital freight forwarding market
Source: Ti
The digital forwarders, shown in the figure above, offer a broadly similar service portfolio, although there are some differentiation points. Most notably, some differentiation arises in the range of transport modes offered, the provision of value-added services such as trade finance and purchase order management systems, as well as the availability of physical assets, such as cross-docking and warehouses.
In terms of the range of transport modes offered, Flexport, Zencargo, and Shipwaves offer the broadest offering, each providing access to all modes of transport including FCL and LCL sea freight, air freight, FTL and LTL road transport and rail. These start-ups have expanded their service offering to cover all transportation modes over time, enabling them to provide end-to-end multimodal services.
The provision of trade finance also appears as a key differentiator, with Flexport and Beacon the only digital forwarders to offer the service at the moment. This service does not only differentiate them from the rest of the digital counterparts but from the captive forwarders too. The availability of physical assets, such as cross-docking facilities and warehouses is another differentiator among the digital forwarders.
Another area where three of the forwarders have a competitive edge over their digital counterparts is purchase order management. Their PO management systems serve to tackle the pain points that shippers face in monitoring the pre-freight production processes, areas which are characterised with limited visibility and a lack of unified communication tools with suppliers.
The digital forwarders in the figure above have very similar digital capabilities, with the majority of them providing real-time visibility, real-time notifications and alerts, collaboration tools, analytics and dashboards, document management and APIs. However, there are some differences in the degree of sophistication across the solutions offered by the main players.
For instance, while all digital forwarders claim to provide real-time visibility, the sophistication and real depth of the service varies across the range. Flexport, for instance, has a competitive edge in the provision of real-time inventory visibility. The level of sophistication of predictive ETAs is another domain where the capabilities of the digital forwarders differ. Basic ETA prediction is widespread in logistics, but the estimates are not precise and typically provide a fairly wide range for fear of over-promising to customers.
Source: Transport Intelligence, April 01, 2021
Author: Transport Intelligence
This brief has been taken from a larger paper, ‘Shifting Patterns in the Digital Freight Forwarding Landscape’ by Ti Senior Analyst Viki Keckarovska. This paper is available exclusively to GSCi subscribers. Each week, Ti’s team of senior analysts and industry experts deliver analysis covering the latest logistics and supply chain trends exclusively to users of GSCi.
This week Ti also published a whitepaper on the topic, ‘Digital Freight Forwarding – A Market Map For 2021‘. Click the link to download.
