Today we shop in our pajamas, comfortable behind our screens. For consumers, ecommerce has become our baseline service expectation – US retail grew by only two percent in the first half of 2016 but ecommerce growth hit 16 percent. Even a phone call can seem like too much effort.
Many assume that the digital transition will remain relegated to the consumer space. Talking with an account manager about freight requirements seems obvious.
But is it?
Take trucking. In the 1980s, Dial-a-Truck – a phone service to leverage communications for enhanced booking – took off. Of course, phones shifted from being cutting edge, as did Dial-a-Truck, which became the trucking technology powerhouse known as DAT.
Lessons from Trucking
While it may not feel that way, trucking has remained ahead of the curve. Discussing this with Cathy Roberson of Logistics Trends and Insights, she partially attributed the trucking advances to the deregulation in the 1980s, which triggered fierce competition, as well as more accessible communications across individual truckers. This tech boom isn’t just about Uber Freight’s launch last week either. Digital trucking platforms reached mass penetration over the last decade. Take C. H. Robinson’s massive $365 million dollar acquisition of freightquote.com or UPS’s acquisition of Coyote Logistics in 2015x at $1.8 billion – a price far above the vast majority of startup exits.
What do forwarders think will happen to freight service by 2022?
In a newly-published survey, nearly seventy freight forwarding managers gave us their thoughts on that. And for an industry sometimes portrayed as change-averse, their response came as a surprise.
There are only so many shapes that modern customer service can take. We gave forwarders three potential models to select which will describe freight service digitization in five years time:
Option 1: Amazon-style Logistics Automation
Support wizards, automated emails, and automated chatbots, all fully integrated throughout both front-end and back-end operations.
With this service model, shippers go global online, managing all things shipment-related – requesting quotes, booking shipments, re-routing, contingency management, and shipment tracking online.
It could be great news for shippers, who would be happy to spend less time (as long as it didn’t impact quality of service). It’s could also be great news for forwarders. No more transferring the same information onto umpteen different forms. And no more flurries of phone calls and emails just to make sure that something that was supposed to get done, actually get’s done. Of course, the cost is less of a personal connection with individual shippers.
Amazon is a true master of full automation, and ominously is a new entrant to freight. Almost every aspect of their operations are computer-driven, and they will do the same with logistics, be that robotic warehouses, driverless deliveries, or international freight.
Option 2: Personal Banking-style Logistics Process Automation
Few people prefer to head to their bank’s local branch for standard transactions, instead going online for the vast majority of routine transactions. Banks aren’t complaining, because online banking has slashed their cost to serve. And we don’t complain, at least until something goes wrong.
Of course, there’s still the occasional transaction where one step in the process still needs to be done in person, like finalizing a mortgage or renegotiating payment terms. But for many people these days, that’s about it for personal touch.
What does this bring to the table? Well, most logistics processes today are routine but still (unnecessarily) rely on people. This requires ongoing personal intervention for routine processes, creating an excessive workload for forwarders and shippers. For forwarders, banking-style automation provides an easier channel for manual intervention when required, while making life easier on a day-to-day basis.
Option 3: Low Logistics Service Automation
Some services still rely on personal expertise … and consumers like it that way. For instance, most people still go to their family doctor with a sore throat instead of heading to WebMD. Family doctors pull from their experience to treat patients, augmented of course with technology-driven tests.
There’s a time and a place for everything, and there were some very good reasons why freight’s digitization has come later than for most other service industries. Some forwarders have come to think that they can only add value precisely because of low automation. But how much longer will freight be like this?
Turns out, nearly 75 percent of forwarders predict their industry will soon be running like personal banking – with high automation augmented by the personal touch. That is, most processes will be largely automated, but there will still be exceptions when forwarders will have to get actively involved in shipments and winning quotes.
How Digitization and Customer Service Can Play Nice
Forwarders thinking that in five years some shippers will be booking and checking shipments in their pajamas busts the misconception that forwarders are change averse. In fact, one of forwarders we interviewed went further, suggesting that beyond just the process flow, much of the physical movement of goods will also be automated by technology like automated stowage and self-driving forklifts.
As Terry Donohoe, President of Sherwood Global Logistics reflected: “I wouldn’t have said that two years ago…but then they started testing driverless cars.” That very week, Amazon completed its first US drone delivery.
Things are changing. And, similarly, changes from digital transparency will not be confined to just prices.
As shippers gain transparency services levels (not just golf-course talk), and even reviews or ratings, forwarders anticipate that customer service will become a more important factor in provider selection, eroding price’s role as the all-powerful decision driver.
Does transparency have downsides for forwarders who can’t live up to service claims? Absolutely. But there are real opportunities for growth. Digitization has the potential to enable empowered service, letting forwarders spend less time on the routine and more on winning (and keeping) new business.
Freight digitization was never just about technology; it’s a new way to shape processes and operations. It’s up to the forwarders to choose how to use it.
John Edmonds works on research and marketing at Freightos, the online freight marketplace.