June 10, 2022 Shippers are Looking for “Elastic” Freight Forwarders

The freight forwarding industry is at something of a crossroads. In the ‘age of disruption,’ shippers need “elastic” freight forwarders.

By James Coombes, co-founder and CEO of Vector.ai

The freight forwarding industry is at something of a crossroads. In the ‘age of disruption,’ shippers need freight forwarders that enable “elastic” operations—the ability to rapidly scale operations up and down in response to market conditions. Basically, companies with “inelastic” operations aren’t responding quickly enough to either disruptions OR rising demand, adding further stress to a gridlocked supply chain.

Freight forwarding has always been a manually intensive business, so it’s almost never scaled effectively. There’s long been a linear connection between bringing on new shippers and the need to hire enough staff to service those customers. This has only been exacerbated by the challenges facing the industry today that wreak havoc on supply and demand; the continued three-year disruption from COVID-19, the Russia-Ukraine War and…. well honestly whatever happens next.

This environment has also resulted in more demand for durable goods and imports which means mechanically more work—and more scaling complications—for freight forwarders.

So how can forwarders look to the future? How can they seize opportunities to scale with the needs of their shippers and, ultimately, serve their shipper customers more effectively?

With the current labor market so constrained and with geopolitical and natural events firing shockwave after shockwave into the system, those are the questions every forwarder should be addressing.

Hiring smartly is part of the answer. The industry would benefit from an influx of ambitious young recruits, but the reality is that there is stiff competition for talent and the nature of forwarding requires expertise and training that takes six months or more before an individual is fully operational. Once trained, retention is an increasing challenge. .

Ultimately, the conversation has to not only turn to technology, but revolve around it.

The most innovative forwarders are actively examining which legacy processes, powered by manual operations, can now be performed – or at least scaled – with technology. They are seeking smarter ways to streamline operational workflows in order to unlock their ability to win more business and still continue to deliver outstanding service.

If forwarders can identify those manual process roadblocks, and then figure out the right tech to implement and simplify – traditional forwarders can become more digital and scalable than was ever thought possible.

Here’s a fantastic example: Team workflows around customs declarations . The status quo of high volumes of emails and PDFs bouncing between inboxes, a spaghetti of complex information to untangle and inconsistent best practices means that a customs broker has now effectively become a knowledge worker. A broker can spend countless hours preparing a declaration, chasing key information, manually keying into systems and reconciling against shipment data to ensure the right actions are performed at the right time to keep a shipment moving and penalty free.

Technology now exists that can understand, triage and act on this data like never before. Machine learning – which is designed  to understand the human interactions that drive knowledge work – is uniquely positioned to meaningfully impact the forwarding industry, provided it is harnessed correctly. Smart automation, built on a foundation of machine learning, can enable operators to process shipments more quickly and with more certainty for their customers.

Automating these processes isn’t a pipedream, either. That technology exists in a robust form today and it’s being adopted by forwarders who have their eye on what the future of the industry looks like. Not a future 25 years off, but rather the next three to five years. The benefit to such forward-thinking forwarders is that operations teams can finally decouple their linear relationship between headcount and customer count. They can dramatically decrease their biggest cost line item – operational cost per shipment – and by bringing their intangible manual operations into the digital realm, they can realistically provide insights into their operations to their shippers.

Technology deployment that achieves elastic operations resonates with shippers. With the lens of these uncertain times, shippers are becoming pickier and savvier about finding strategic partners who prove they know how to handle the volatility of these times, and who can build more resilient and flexible supply chains.

These modern, savvy shippers want to work with forwarders who have the right tools to future- proof their own operations and that can deploy the right technology stack to scale their capacity and evolve with the market.

If you’re a forwarder, you’ll need to demonstrate that to shippers. If you can’t, well—they’ll find a forwarder that can.

James Coombes is the co-founder and CEO of Vector.ai, an automated operating system for freight. From bookings to accounts payable workflows, Vector.ai aims to fully automate the shipment lifecycle. Coombes has a bachelor’s degree in biochemistry from Imperial College London and an MPA from Harvard University.

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