What Shippers Want

A roadmap for online freight services

By: Zvi Schreiber, PhD

Table of Contents

Introduction: Online freight sales

Industries online: From travel to banking to freight

Why freight has been slow to move online

External demand for online freight automation

Internal drivers of online freight automation

10

Roadmap to online freight sales

12

Challenges ahead

18

The start of something great

19

Introduction: Online Freight Sales

The trend is clear: more industries are quoting and selling online. Passenger
travel has been online for 15 years. Even complex products such as insurance
are moving to e-commerce. As global B2B trade expands in both scope and
complexity, there is an increasingly acute need for instant anywhere-to-anywhere
transportation price quotes and sales. Yet international freight remains a laggard of
the e-commerce revolution.
This paper presents real world experience, and data, of how other industries
have leveraged online channels in order to increase sales and efficiency. The
paper reviews existing challenges faced by freight forwarders and 3PLs, including
more dynamic supply chains, increased competition, and changing shipper
expectations. The opportunities for the transition to online sales will then be
surveyed, together with a suggested roadmap for industry adoption.

Industries are going online:

From travel to banking to freight
In the past century, the shipping industry has
developed along two primary vectors. The first,
containerization, was a natural evolution in the
scope of shipping. This continues today with
mega-container ships.

Six decades into the computer

revolution, four decades since the
invention of the microprocessor,
and two decades into the rise
of the modern Internet, all of the
technology required to transform
industries through software finally
works and can be widely delivered
at global scale.

The second defining vector is information transfer.

The information revolution paved the way for
Marc Andreessen, WSJ
improved information transfer throughout the
supply chain. Inventory management and EDI
spurred supply chain evolution among companies
eager to save costs, increase efficiency and optimize warehouse organization.

Many industries were able to move more rapidly from internal connectivity to
e-commerce: retail, consumer travel, financial services.
After GDS connectivity facilitated efficient booking between travel agents and carriers,
the airline industry became a global
leader for e-commerce as well. In
order to reduce costs and create a
customer-facing solution, services
such as Expedia took hold in the early
90s. This became so successful that
airlines themselves also started
eCommerce Takes Off: tickets booked online
to offer online booking direct from
their websites. Consumers loved the ease of access, efficiency and transparency;
usage increased a hundred fold from 0.5% of tickets booked online in 1997 to over 50%
as early as 2007(1). Empowered and educated consumers drove change, supporting
e-commerce ready companies and pushing others online.
Banking, and stock trading, which are both more complex and bear unique security
concerns, are other examples of industries adopting widespread e-commerce activity be
leveraging existing internal connectivity. First deployed in the late 1950s, ERMA was used
for accounting and check handling in order to help banks scale to larger client bases. In
1983, the Bank of Scotland first offered bill paying over the phone. As demand surged in
the 90s and online regulation developed, banks increasingly offered online platforms for
banking. By December 2014, over 55% of US customers preferred online banking, some
with dedicated online banks.
But there are reasons why freight forwarding services have so far eluded online sales.

(1)

LiveMint, 2014.

Freight has been slow to move online

While freight shipping is the backbone of the global economy $18.7 trillion dollars of
goods were shipped in 2013 online automation of sales has remained elusive. One
possible explanation is the sheer complexity of rate management. One average
mid-sized freight forwarder interviewed had dozens of ocean contracts, over 50 airline
contracts and over 100 trucking
contracts, with each of these 200+
Whats keeping Freight sales offline?
contracts in a different format
Complex shipping rates and fees
(some of them non-electronic) and
changing at different frequencies.
Lack of standard tariff formats
A global 3PL may have thousands
Prices originate from multiple countries
of carrier contracts. Updates
and different agents
may come at any time, and
Value of Personal Relationships
there is no standard data format
Freight as a big-ticket item
for tariffs/contracts. The lack of
standardization also means that one
Online security
logistics provider may have rates
Culture of conservatism
with three or four different names for
the exact same fee.
By definition, every international shipment involves parties in multiple countries - either
different freight forwarders with an agent relationship, or different offices of the same
forwarder. A modern freight forwarder may be able to automate internal rates, but if that
forwarder is dependent on agents or other company offices, internal automation may
not be sufficient; they cannot automate the full door-to-door quote until they obtain rates
for the remote pickup or delivery leg. This dependency on a third party or overseas
office lowers the incentive for partial automation creating a barrier to e-commerce.
Many logistics providers also worry about the potential for automation to remove the
personal relationship element that plays a vital role in freight. However, modern
IT platforms have shifted over towards connecting, rather than alienating. Alibaba,
for example, connects foreign manufacturers with importers, helping to forge new
relationships, rather than replacing them with only digital transactions. Indeed social
networking is a key element of many modern web services.
The earlier days of the internet saw consumer goods sold online. Low priced consumer
items involved less risk, easier pricing and catered to a broader online audience that was
prepared to pay for the convenience of online shopping. It took much longer for cars to
be sold online. Freight, as a complex big-ticket item, naturally missed the first
waves of automation. However, B2B online shopping is growing steadily, doubling
B2C e-commerce sales at about $560 billion of sales in 2013(2), creating new business
opportunities for online sellers.
Expanding online sales show that issues pertaining to B2B online trust and credit are
being gradually resolved. Two decades into the E-Commerce revolution, online credit

(2)

2013 B2B Commerce Trends, Oracle, 2013

options for businesses are now widespread, with even the most reputable and sensitive
industries, including banking and health, automating customer-facing solutions online.
While legitimate concerns still exist, technological and online social credibility solutions
are improving online credibility.

Things are changing: External demand for online freight

While these barriers are significant, they are not impermeable. Indeed other industries
such as insurance have overcome barriers which are arguably no greater.

Even as technology renders many of these barriers permeable, enabling higher

connectivity in more realms, demands on logistics service providers are increasing.
Modern supply chains are more complex than in the past, with more agile and efficient
supply chains that create more demand on carriers and forwarders to provide instant
transparent price quotes.
Lets examine the factors creating the need for instance pricing.

New Generation of Procurement Managers

Todays procurement managers shop on their iPhones, download movies in seconds,

and enjoy same-day retail delivery. Instant, online service is becoming more prevalent
in the B2B world. This generation is defined by instant gratification; over 50% of internet
users will leave a website if a video takes more than ten seconds to load(3). However,
when it comes to international freight services, they are regularly asked to wait days for a
price quote.
In a mystery shopping program, evaluating quote
requests from an authentic looking medium size
shipper with repeat business to the worlds top freight
forwarders, the average wait time on a quote was
about three days. Worse, a staggering 43% of the
online and email requests were acknowledged and
later forgotten. A young procurement manager simply
wont wait 3 days, and the freight forwarder will waste
time creating a quote for a customer who has already
ordered from a competitor. Indeed the data shows
that quoting first increases the chance of securing the
deal by several percentage points.
As such, its no surprise that the so-called IT Gap, which measures shipper satisfaction
with 3PL technology, indicates that nearly 40% shippers are dissatisfied with their
3PLs technological capacities(4). Given freight forwarding competition, todays
unsatisfied customer is more than likely a competitors future customer. Despite
personal relationships, shippers have their own competitive pressures and cant afford to
be too loyal. In addition, while research indicates that 3PLs instinctively try to differentiate
on price to attract business, 86% of the time a satisfied customer is willing to pay more
(3)
(4)
6

Instant gratification is making us perpetually impatient, Christopher Muther, Boston Globe, 2013
2015 Third-Party Logistics Study: The State of Logistics Outsourcing, Page 9

Benefits of Customer Satisfaction

Happy customers will refer an
average of 9 new customers.
86% of the time, happy
customers will be willing to pay
more.

Given 3PL competition, todays

unsatisfied customer is more
than likely a competitors future
customer

for service. This slight service premium is a valuable source of margin for 3PLs. Today
customer satisfaction is all about instant service.
A happy customer is also a valuable source of referral traffic; a satisfied customer refers
an average of 9 new clients! In the relationship-first world of freight, word of mouth can
make or break a business(5). But nowadays instant gratification is at least as important as
golf in making customers happy.

B2B E-Commerce

Alibaba.coms success is a testament to the rise of online B2B transactions. Frost and
Sullivan anticipate that the B2B e-commerce market size will have a gross merchandise
value of $6.7 trillion by 2020(6), with the B2B e-commerce market double the size of
the B2C e-commerce market. The digital connection between suppliers and importers
around the world has made headway, indicating online B2B maturity.
Companies that communicate online, source online and pay online(7) find it anachronistic
to go offline in order to complete the shipping process. This seems even more foreign
when compared with the marked progress in the retail shipping space, with many
providers offering next day, or even same day, shipping, all with instant transparent
pricing.

Dynamic Supply Chains

EDIs introduction into the supply chain over 30 years ago made complex JIT supply
chain management possible, enabling a higher ROI by reducing in-process inventory and
carrying costs. Unified protocols (EDI, XML and others) facilitates increasingly advanced
external supply chains. This demands flexible responses from logistics providers, who
may find themselves bogged down trying to price hundreds of alternate routes with time
limited RFPs.
The push for dynamic logistics quoting can also emerge from the consumer side, as
unanticipated heightened consumption can be more easily tracked, requiring rapid
transportation in order to bridge gaps. As supply chains become more dynamic,
logistics providers will likely find themselves forced to provide either more spot
quotes or more complex tenders.

(5)
(6)
(7)

Oracle Customer Experience Impact Report, 2011

B2B eCommerce Market Worth $6.7 Trillion by 2020, Sarwant Singh, Forbes, 2014
B2B Payments are Coming: Banks Must Prepare

The frequency of these tenders or spot quotes is also rising. Product lifecycles are on the
decline. Approximately 50% of a companys revenues are derived from products
launched in the last three years(8). In electronics and fashion product lifecycles are still
shorter. Every new product bears with it a bevy of new logistics requirements across the
entire supply chain. For a logistics provider that successfully manages to attract
repeat business, this still means expensive overhead from frequently generated
tenders and spot quotes.
Of course, shippers arent the only ones pushing for online freight sales. Internal
motivations within 3PLs are playing a role as well.

(8)

The Product Lifecycle is in Decline, Karsten Horn, Digital Supply Chain, 2012

Internal drivers for online freight automation

High Cost of Sale

As overcapacity, rate volatility and competition force companies into leaner operations,
the cost of sale on rate or spot quotes can eat significantly into a providers bottom line.
On spot quotes, generating a professional doorto-door international freight quote can easily take
a total of 1 person-hour (part at the origin office
Assuming 15-30% win
and part at the destination). Once negotiations
rate 2 hours quoting and
are factored in, two hours of work could have
per quote negotiation time
been invested, costing employers $100 per
quote(9). Typically 15-30% of quotes convert
into orders so the forwarder may be burdened with $300 or more of direct cost,
just for the time spent quoting, for each booking! In many cases that is more than the
entire profit on the booking. Therefore there is huge pressure for forwarders to reduce the
cost of sale of spot quotes by way of automation.
Potential cost of sale for spot quote:

$300

The cost of sale on tenders can be larger still. A pricing team can easily take weeks to
generate a large enterprise tender. Even when completed, management scrutiny can
cost a company higher labor hours. The workflow and operations/sale communication
required can render rates significantly less profitable, particularly when
winning the tenders isnt guaranteed.

Resources for Quoting

The time required to compile quotes,

rates and tenders doesnt just add
up into additional costs for logistics
providers. A recent study found that
freight sales executives spend about
43% of their time dealing with
pricing, data and RFP issues,
instead of focusing on improving
business efficiency and relationship
building(10). As a matter of fact, only
45% of a sales executives time is actually spent dealing personally with customers. This
ultimately impacts both existing account management as well as future lost sales.

(9)
(10)

10

Assuming an average all-in salesperson employer cost of $90,000 per year.

2015 Third-Party Logistics Study: The State of Logistics Outsourcing, Page 37

Competitive Pressure

The logistics service provider landscape is crowded, with well over 100,000 freight
forwarders vying for business around the world. Even among the leading global
freight forwarders, competition is fierce. The top ten ocean forwarders control only
8.5% of the market, while air forwarding fares slightly better, at 25% market share(11).
As a result, 3PLs are forced to be extremely
10 of 11 forwarders would
competitive. To better compete, logistics providers
be immediately open to price
end up differentiating on price rather than value
negotiations for new business,
when trying to land business. One study found that
dropping as much as 30% of the
10 of 11 forwarders would be immediately open to
initial price within two to three
price negotiations for new businesses, dropping
conversations
as much as 30% of the initial price within two to
three conversations(12). This translates into lower
profit margins and pricing wars. A recent study found that 53% of shippers are currently
consolidating vendors, which can force logistics providers who compete on price to
further lower their ultimate take(13).

Low margins

While revenue for the freight industry has remained relatively stable, it has not achieved
the rapid growth it enjoyed during the early 2000s. Not only has the size of the pie being
shared by freight forwarders remained almost constant, with a decline in 2008-2009
(leading to a 14% decrease in US trucking tonnage, and nearly a 10% decline in air
freight)(14) slow growth of only 3.2% in 2013(15), the industry has a traditionally low profit
margin on these revenues. Roland Berger assesses that freight EBITDA profits remain
in the 1%-4% range of revenue(16).
This low margin can also be volatile. An inherent part of the global economy, changes
in global manufacturing or trade can have severe impacts on the already low margins of
logistics providers. For example, in 2010, two years after the initial recession hit, nearly
50% of leading 3PLs in the US were still not meeting revenue growth projections, with
20% of the same 3PLs not turning any profit(17). Low and vulnerable margins amplify
the importance of cost-cutting and lean operations to maximize profits.
These profit margins are further lowered by mistakes in invoicing or quoting that
typically plague non-automated industries. A former Maersk CEO recently hazarded
a guess that 12% of invoices have inaccuracies, while other industry leaders put the
number significantly higher. The result is over $680 million dollars in annual errors(18),
many times taken out of the pocket of 3PLs.
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)

Freight Forwarding: Sustainability of Business Models, Matthias Hanke, Roland Berger, 2012
Ocean Freight Sales: discounts dominate, not value selling, Simon + Kucher & Partners, 2014
2015 Third-Party Logistics Study: The State of Logistics Outsourcing, Page 12
Trends, Joseph OReilly, July 2009
2014 growth in 3PL business, revenue projected, Corianne Egan, Journal of Commerce, 2014
Seafreight Forwarding: Business Model Under Pressure, Roland Berger, 2013
Annual 3PL study indicates industry is showing post-recession growth signs, Jeff Berman, Logistics Management
2010
Digital Shipping Platforms Cut $684 Million in Errors, Isaac Arnsdorf, Bloomberg, 2014

11

Roadmap to online freight quoting

High cost of sale, increased competition, low margins and poor time management
demand leaner and more efficient logistics operations. Relationships are and will remain
critical in freight. However, these relationships can be bolstered by an automated
support system that gives the customers the quick service they want, and frees
up expensive personnel to focus on finding new customers. Other industries have
successfully leveraged online automation to work faster and better, and freight, while a
complex industry, is no exception.
Once managed by an online freight sales solution, automated data can facilitate faster
and more accurate freight activities, freeing up sales executives to focus on relationship
management, enabling instant rate generation, single source of truth for pricing, faster
customer interactions and better customer service. The optimal way to implement this is
via a gradual roll-out:
1.

Internal rate management and quote automation to facilitate internal, in-house

automation, while providing business intelligence insights across the company.

2.

Sharing rates with trusted agent and carriers, establishing instant, multi-leg
quoting together with existing partners.

3.

Online rate calculator for established customers, enabling them to log in to the
logistics providers website and generate instant quotes, based on their agreed
tariffs.

4.

Online commerce where website visitors

can obtain quotes and place orders,
converting visitors into paying customers
with near zero cost of sale.

E-Commerce

Online rate
calculator for
existing customers

Internal automatic
pricing

12

Sharing rates with

agents/overse as
offices

Online Freight: Internal Pricing Automation

Core Benefits
Instant quoting higher win rates
Eliminating errors
Reduced cost of sale
Big-data insights

At the core of the automatic price quoting process is managing buy rate contracts.
Technological hurdles in automating complex rate management have recently been
overcome, allowing even complex multi-modal rates to be accurately captured in a
database. Modern routing and pricing algorithms can accurately plan and price
door-to-door multi-modal freight forwarding quotes in seconds.
Once contracts are centralized and available
throughout an office, it provides instantly tangible
benefits:
Accuracy: When buy rate contracts are managed,
the system emerges as a single source of truth,
with instant pricing propagation through the entire
organization. Carrier price updates and short-term
promotions may be instantly disseminated, and
various mark-up levels can be built into the online
system, allowing across-the-board control over
pricing.

Time spent updating to

current market conditions
has been greatly reduced...
Automating the quote
process has improved the
customer experience and
ultimately our customer
relationships
Shu-Chun Tsai
Apex Logistics

Customer service: Rate management with quoting automation facilitates far faster
operations, enabling near-immediate turn-around for customers. As discussed above
instant responsiveness is a key factor in the satisfaction of the modern customer.
Efficient operations: Data management is one of the biggest time spends in freight.
Sales executives, operations desks and pricing managers all spend significant amounts
of their time on inputting, updating and extracting pricing data. Automating pricing can
reduce rate distribution to mere seconds, spot quote requests to minutes, and even
tender generation to just hours. This increases profitability and frees up time which
may be invested in relationship management, process optimization and more, allowing
businesses to grow instead of just treading water.

13

Big Data insights: Automated quoting brings

with it unprecedented insights into the sales
process including the performance of each
sales office, sales person, customer, margins,
and trade lane.
Business intelligence can also be used to
analyze market pricing trends, seasonal
variation, competitive pricing, all of which can
be leveraged for improved negotiations and
more competitive tender pricing.

Online Freight: Sharing rates with Agents/Carriers

Core Benefits
Rapid rate update from carriers
Extend instant quoting to door-to-door quotes worldwide
Fill out product offering to cover all modes and lanes
Increase sales via agents

Stage two of online freight automation allows a

logistics provider to automatically receive rates
from carriers and share rates with agents or
overseas offices.
For example, imagine a freight forwarder in
China and another in the US networking their
rate repositories including local pickup and
delivery charges on both sides (complete
with mark-ups). By pooling rates, suddenly
both companies can instantly and accurately
quote door-to-door shipments between China and the US, despite the fact that they are
in different time zones, using different languages and currencies. Both companies now
have a more comprehensive offering, and quote faster with lower cost of sale.

14

Carrier integration: Today, carrier rates are frequently distributed in non-standardized

Excel, PDF or Word format. When dealing with hundreds to thousands of contracts,
this creates a blizzard of constantly updating contracts with critical details that are
occasionally lost in translation. Each GRI means time wasted on format changes and
distribution. However, modern rate management systems may have the flexibility to
digest many Excel formats. And some carriers are already providing an API (Application
Program Interface the modern version of EDI) for online quoting. However APIs are so
far common for trucking (especially in the US) and unusual for other modes.
Carrier integration: Today, carrier rates are frequently distributed in non-standardized
Excel, PDF or Word format. When dealing with hundreds to thousands of contracts,
this creates a blizzard of constantly updating contracts with critical details that are
occasionally lost in translation. Each GRI means time wasted on format changes and
distribution. However, modern rate management systems may have the flexibility to
digest many Excel formats. And some carriers are already providing an API (Application
Program Interface the modern version of EDI) for online quoting. However APIs are so
far common for trucking (especially in the US) and unusual for other modes.
Agent integration: Even when an office or company has automated quoting, relying on
agents for pricing can be a wrench in the pricing gears. During mystery freight shopping
trials conducted by Freightos, it was not rare for two legs to be quoted in only hours
but for quote turn-around time to be extended to days when waiting for a remote pickup or delivery leg from external agents. However, agents using the same freight online
automation system can share their rates with other logistics providers, including built-in
markups if required, to make agent quoting rapid and accurate. This cross-company
integration can facilitate faster operations and more transparent pricing in seconds.

Online Freight: Web-based customer rate calculator

Core Benefits
Increased customer satisfaction
Zero-workload quoting and bidding
CRM for insights into shipper behavior
Increased allocation and customer loyalty

Once all rates and quoting are automated, its as easy as flicking a switch to allow
customers to access online quoting, much like your sales representatives and agents
enjoy. In the competitive freight marketplace, a differentiator of providing customers with
instant, online quotes can be a true game-changer. Changing supply chains and JIT
deliveries requires prompt service, which can overload sales agents. Customer-facing
quotes solves this problem, while facilitating more efficient operations.
Instant online quoting: Valued shippers can be provided login details to the 3PLs own
web site supporting instant quoting based on the shippers tendered rates. Whenever

15

tendered rates are not available, the shipper can obtain spot quotes based on the
logistics provider and its agents.
A large shipper may have dozens of people involved in logistics and they can all become
accustomed to using the 3PLs web site as their primary resource for planning and pricing
shipments. The end result is a satisfied loyal customer that can generate instant quotes
without slowing their workflow.
Zero-workload quoting: Increases in quoting activity can frequently create a severe
burden on a logistics providers pricing and sales team. As discussed, the labor cost of
a spot quote may erode all the profit of a spot booking. With customer-facing quoting,
this issue is resolved, as the sales team is freed up to deal solely with relationship
management and secured quotes. Providers can bid more (and win more when
differentiating with faster, more accurate quotes) while saving from reduced sales costs.
CRM for shipper insights: By tracking shipper quoting activity, your sales team
can identify changing shipper needs, remaining ahead of the curve. Notice a drop in
customer quoting? Quickly call the customer and address the underlying issue whether it
be service or cost. See a sudden uptick in a trade lane? Maybe you can squeeze out a
bit of extra margin.
Shipper log: Let shippers maintain a log of their quoting activity on your website. The
insight and trends that they will be able to discern create additional buy-in that keeps your
customers coming back.

Online Freight: Public Quoting and e-commerce

Core Benefits
Develop a major new revenue stream from SMEs
Online lead generation
Near zero cost of sale

In 2014, double as many B2C and B2B businesses cited inbound lead generation as
their primary source of lead generation than businesses citing outbound leads as their
primary source(19). Research into new business partners takes place more and more
online. By the time a new customer approaches a supplier, 57% of the purchase decision
is already completed(20).
All of which means that the online customer journey
your customer takes should be flawless. TMS
systems increase the efficiency of internal
operations; online freight quoting platforms
can do the same for external, customerfacing operations. Easy access to cost and
shipment prices is the second-most demanded
(19)
(20)

16

State of Inbound, 2014.

CEB Research, 2014.

service from shippers that work with 3PLs, second only to real-time info on shipment
info. Unsurprisingly, the next three requirements also focus on faster, more efficient online
operations(21).
System Feature

3PL User Ranking (1-5)

Availability of real-time information

4.2

Easy access to cost and shipment pricing

3.9

Increased 3PL ability to respond to requests

3.7

Greater visibility of global operations

3.7

More professional/productive sales calls by 3PL executives

3.0
Survey of online features requested by shippers

Improved customer experience: Allow customers and potential customers to generate

quotes instantly, right from your website. Instant quoting, combined with an outstanding
customer experience, broadcasts that a technologically-adapt logistics provider that puts
the customer first.
Convert visitors into leads: Making pricing visibility contingent on the user providing
some data, such as their email address or telephone, allows logistics providers to convert
website visitors into leads, and from there into customers. Online quoting and booking is
particularly relevant to SMEs, which play a crucial role in the import/export ecosystem. In
the United States, over 97% of companies that export and import are SMEs with under
500 employees(22).

oting

Internal Qu

Rate
manamanagement

rk

ier Netwo

rr
Agent/Ca

Automated quoting
Sales-Op
Connectivity

Rapid rate
updates

Pricing/
Performance
analytics

Instant agent
quoting

uoting

rQ
Shippe

uotin

cQ
Publi

On-demand selfservice quoting

Shipper log
Inbound customer
experience

(21)
(22)

2015 Third-Party Logistics Study: The State of Logistics Outsourcing, Page 39

US Exporters in 2011: A Statistical Overview, 2011

17

Challenges Ahead

While promising, there continue to be certain obstacles that hinder the full adoption of online
freight e-commerce. These challenges can be broadly divided into technical obstacles, which
are rapidly being resolved, and cultural barriers, which currently limit adoption to the most
forward-thinking logistics providers. For example UPS Supply Chain do provide instant door-todoor air freight quotes online and some smaller providers also quote FCL online.

Cultural

Data Sharing: Each office of freight forwarders has typically had its own P&L which has
been a disincentive from sharing rates even with other offices within the same organization.
However, industries like banking have successfully bridged this obstacle with rule-defined
sharing and security that silos data while allowing limited, approved access.

Training customers: While extremely beneficial to customers, online freight procurement

is a recent development that may not be familiar to shippers. The idea of being able to
generate and book an online shipment of a small product may be familiar to customers
from Amazon but doing the same in a freight business is a fundamentally different
experience. To fully leverage the benefits of online freight platforms, it is critical to train
shippers about both the processes and the platform.

Lack of standards: The independent development of proprietary internal systems for

freight procurement has led to a plentitude of internal standards for air, ocean and land
freight. This goes far farther than different rate formats; one logistics provider may have
three or four different acronyms for specific surcharges. Overcoming this challenge requires
either powerful software or a cultural change from carriers, which must be kick-started by
3PLs and shippers. The evolution of data standards, like EDI and more recently eAWB, are
proof that the industry recognizes the importance of industry coordination, but even these
show significant shortcomings in full adoption.

Cloud computing: To allow optimal global access and analysis, online freight computing
generally relies on cloud storage. Logistics companies are used to having all their missioncritical data in their own data center and some still see cloud as a risk. Just as companies
keep their money in the bank (not under the mattress), more companies are recognizing
that storing their data in a professional secure cloud is cheaper and actually more secure
than keeping it in-house. Cloud technology from global providers like Amazon and Google
adhere to best practice security standards (ISO 27001, SSAE 13 / SSAE 3402 / SOC 2
Type II Audit) which in-house IT cannot usually match. Cloud has been adopted by leading
enterprises in logistics and beyond, such as DHL, Siemens, Shell, Pfizer, SAP and others.
Still it requires a conceptual shift for many logistics providers and IT may be reluctant to
lose control of the hardware.

Technological

18

Rate management: The myriad of rate formats requires smart automation software that
can instantly identify rate formats, surcharges, templates and other text details in each rate
in order to standardize and formalize it.

Routing and pricing: One reason that freight has been so slow to automate is due to
the complex nature of the routing and pricing of shipments. Complex, big-data algorithms
are required in order to generate dynamic routing and all-in pricing from thousands of
contracts, millions of port pairs and countless surcharges. In the past this was a real
barrier, but in the era of Google Maps and Kayak, it is more than feasible to consider
millions of routes and produce an optimized door-to-door quote in seconds.

The start of something great: freight is moving online

Following suit from other industries, forward thinkers in the industry are already adopting online
freight quotes and sales as a key differentiator, gaining an important competitive advantage in a
crowded market space.
Early figures point at significant benefits for early adopters. Preliminary research shows that even
mid-size logistics providers can eliminate over $150,000 of operating costs with automated
quoting(23), while other forwarders have reported spot quote win ratios that improve by an
estimated 20% with faster, on-demand quotes.
Online freight sales platforms can provide unprecedented efficiency and optimization in the
logistics sales process. The roll-out process can be just as efficient. Since many platforms are
cloud-based, and browser and an internet connection is all that is necessary to deploy these
platforms to hundreds or thousands of users. Generally packaged as SaaS (software as a
service), these platforms can also be significantly cheaper than deployed legacy software, that
also accrues expensive installation and maintenance fees.
Early adopters have already tapped automated freight rate management and quoting, and
online quoting, as the future of logistics sales. Much like in other industries, pioneers gain the
first-to-market advantage, increasing market share, by enhancing both external and internal
transparency and efficiency with e-commerce and, most importantly, providing an outstanding
customer experience. These leaders stand to reap huge benefits, usually at the expense of
companies that lack the vision, who ultimately hemorrhage market share to more innovative
competitors.

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Freightos Kestrel Case Study, 2014.

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Free Online Audit

Freightos has developed an internal audit in order to assess adoption of online freight sales.
More than 1/3 of the worlds fifteen freight forwarders have already taken the Freightos
Challenge, conducted through a series of mystery shipping pricing quotes.
The results?
Not one company so far has customer-facing multimodal online quotes.

The average time to quote to a prospect SME was over 60 hours.

43% of all quotes requested went unanswered.

Glaring problems in internationalization, quote uniformity and clarity

Curious how you compare to the worlds top freight forwarders (and how you can gain a valuable
leg up in automated quoting)?

Click here to request a free

online audit.

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About the Author

Zvi Schreiber has founded and led multiple high-tech companies, including
Tradeum (acquired by VerticalNet), Lightech (Acquired by General Electric),
Unicorn Solutions (acquired by IBM) and G.ho.st. At Lightech, Zvi had
significant exposure to the freight world from the perspective of a shipper. The
lack of online automation and inefficiencies he encountered here ultimately
served as a catalyst for creating Freightos.
Zvi studied in the University of Cambridge and Imperial College, earning a PhD in Computer
Science. He is the inventor of multiple patents and has written and spoken widely.

About Freightos

Freightos is automating the trillion dollar global B2B freight industry and bringing it online. Using
big data technology, Freightos enables freight forwarders, shippers and carriers to manage
rates and automate freight booking and pricing online, introducing unprecedented efficiency and
transparency into the industry. Registered in Hong Kong with offices in the Middle East, Asia,
Europe and the US, Freightos has already helped dozens of freight forwarders, including top ten
global companies, as well as Fortune 100 retailers, automate freight sales, routing and pricing
online, while providing big data-drive business insights to optimize operations. Learn more at
www.freightos.com.

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Learn more at freightos.com

sales@freightos.com
+1 908 301 6025
+44 (0) 203 468 1234
+49 171 302 2065

linkedin.com/company/freightos
facebook.com/freightos
@freightos
www.freightos.com

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