The Landscape Is Set To Digitalize Logistics

Logistics technology platforms are coming online fast & furiously in the race to connect shippers, forwarders, carriers & brokers, enabling them to collaborate in real-time across their global supply chain network. In our world of global trade, shipping cargo is one of the most complex yet least connected tasks.

The logistics industry still very much manages shipments using manual methods, spreadsheets & antiquated software requiring many duplicated data entry tasks. Communicating through multiple phone calls (or voicemails), emails (possibly landing in ‘junk’ folders) & sending faxes (rife with communications errors) is still very much the norm in freight forwarding.

Shippers, forwarders, carriers & brokers want & need to move into the age of digital logistics to make the world of importing & exporting easier for their businesses. Investing in digitizing their processes with the ultimate goal of simplifying shipping in order to cut costs throughout their supply chains; sounds enticing. In reality, finding a reliable & widely accepted online freight pricing, quoting, booking, documentation & communication platform has proven to be a challenge.

The ‘cake & eat it too’ concept of having a multi-faceted online logistics management platform with all the bells & whistles to digitalize every possible transaction in the cargo shipment life-cycle, that is cheap, reliable & secure, just isn’t out there…(yet). In today’s day & age of “cheap, cheaper, cheapest”, leaving near skeletal margins has limited the ability to invest in such technology. Shippers, forwarders, carriers & brokers are continuing to use menial methods to transmit documentation & critical information in order to communicate across their supply chains.

As much as an online freight forwarding management platform could simplify the logistics business in the areas of cargo pricing, quoting, booking, documentation & communication, the key common area that the industry continues to struggle with is inconsistency across the supply chain. The cost & process to transport air or ocean freight from point A to point B within all the different trade-lanes throughout the world, such as Trans-Atlantic, Trans-Pacific, Asia-Europe etc., is subject to many existential factors with inconsistent peak/low seasons at differing times in opposite hemispheres; causing dramatic freight rate fluctuations.

For example, the Asia to North America market for ocean carriers experiences a surge in cargo moving in mid-January to mid-February to beat the Chinese New Year deadline when factories in China close for 2-3 weeks causing rates to increase due to lack of space on vessels. Due to demand for cargo moving into North America, carriers raise the rates during this time with what is called a GRI (general rate increase) or PSS (peak season surcharge). Cost of fuel increases where carriers change the fuel surcharges when the price of oil rises with what is called BAF (bunker adjustment factor). Carriers also increase rates when terminal costs rise & routinely pull vessels out of rotation to restrict ocean cargo capacity & drive prices higher for heavier volume routes. When there is high demand due to the lack of vessels servicing these routes, rates increase without notice.

Same goes for air cargo carriers & the constantly changing freight rates due to the various peak/low seasons. The air cargo industry in regions such as Asia-Pacific, North America, Europe, Middle East & Africa, are seeing improved volumes & rates are starting to move up. Manufacturing ex-China is improving & is translating into improved air freight volumes & helping to move rates up to peak season levels. As demand increases, capacity discipline also plays a part in driving up rates & pricing power. Again, when demand is high due to the lack of aircraft servicing these routes, rates increase without notice.

Both air & ocean freight rates are seasonally-adjusted, up or down, based on the strength of the US dollar, weakness in the Euro, economic & political conditions, slow or increased growth, capacity & volume, peak/low seasons (which differs by hemisphere), international holiday’s, cultural & religious celebrations; all causing dramatic fluctuations in freight rates.

Most ocean carriers still do not have the technology to quickly locate or track ocean containers in real-time throughout the supply chain. With over 90% of world trade moving by sea, there is little information about the shipping route or multiple stops they make. It’s only been in recent years that some vessels have begun transmitting location data, but again it’s not consistent across the board.

Since the global business of shipping products, goods & materials by air, ocean, truck & rail is largely not digitalized, companies that function as a sort of Expedia for freight, allowing shippers to book online, still is not a viable option for many. Online platforms such as these need to be constantly updated. Evaluating & calculating cargo rate changes in order to keep freight system databases accurate requires constant back & forth communication with the carriers, which ironically still happens offline in the form or phones calls, emails & faxes.

That said, the speed & global reach that online systems provide is the wave of the future of shipping. Using an app on your smart phone to get a price quote, make a booking, obtain documentation & communicate across the supply chain with little human interaction is how digitization may help the shipping industry expand & move forward. Expectations for instant processes are growing & a high percentage of shippers believe that digitization will increase efficiency within the logistics industry.

A leading Danish ocean carrier is adopting digital technology to ensure freight forwarders, shippers & vessels can track & communicate capacity needs. The line recently launched an app allowing shippers to view routes or route changes, receive push notifications & schedule confirmation. Similarly, the ports of Los Angeles, Long Beach & New York/ New Jersey will soon participate in a national supply chain information-sharing portal to decrease inefficiencies.

Shippers are constantly demanding more service effectiveness & efficiency to drive down their supply chain costs & improve service for their end customers. The logistics industry must change; either companies become more digitalized, transparent & interactive in real-time or they simply fall behind.

Cargo Spectrum is proudly in the age of digital logistics to make the world of importing & exporting easier for your business. Need more details or have any questions about Air Shipping, Ocean Cargo or Ground Transport? Our Cargo Spectrum representatives are here to help. Call us on 1.888.273.5575 | Request a Quote | Email us at info@cargospectrum.com. Learn more about Cargo Spectrum.