The transport and logistics industry is under heavy pressure these days. Especially following the technology development with big data (cloud) opportunities and secure interconnections between companies, customers and service operators. Cloud solutions help companies achieve better execution, visibility, cost savings, and collaboration with trading partners across the supply chain. What's more, they break many of the barriers for smaller players to adopt digital practices, since they usually come with low initial investment models. It challenges the normal "on-premise" server functionality that still exists in many companies. Cloud is still at its infancy in many companies in Europe, even though the technology is very well developed.
We recently participated in a conference hosted by The Danish Freight Forwarders Association, discussing the future of logistics. The main focus of "Logistics 2019" was digitalisation and guidance on how logistics providers should act in the future, to keep their customers base. It was held on the premise of the "TRANSPORT 2019" exhibition, in Herning, Denmark.
The freight forwarding and transport business have never been a big money maker, due to many reasons. One of them is that these companies often started out as a family business years ago and have managed to keep the business alive for generations. Some have reached a level where the critical mass is achieved, and profitability has slowly grown and secured the business. Big mergers in the last 25 years have obtained a few big players like DSV etc. Therefore, based on a relatively low-profit margin for most, the focus of being first with anything, has never been a high priority. However, this is about to be strongly challenged– today and definitely in the years to come.
The different keynote presentations at the conference varied from carries talking about their own experiences with new technology, to shippers talking about expectations and demands to freight forwarders.
The most appealing presentation was done by Senior Lecturer Agnieszka Zulewska, from VIA University College in Denmark. She has done a study on the Innovation level of 20 different Freight Forwarders in Denmark: 15 SME (small and medium sized) and 5 LEC (large).
She presented a newly finished study on “How innovative is the Freight Forwarding Business in Denmark today?”. Many interesting facts and figures were revealed and some of the key takeaways was that globalisation has made cost-minimising logistics a key competitive parameter – and the Danish Transport sector cannot compete on price level any longer. Therefore, it is a prominent need for differentiation. The industry is missing internal alignment, visibility and integration across systems. Danish T&L companies see “digital fitness” as a challenge and are generally passive towards innovation. The majority of players in this industry only work with innovation when it becomes a requirement from their customers.
It is clear that the Danish T&L sector is lagging behind when it comes to technology. They still trust their ability to keep a close relationship with their customers without the implementation of digital capabilities. A personal relationship is the mantra and has been for decades. The problem is that almost all logistics service providers do business the same way and therefore it becomes harder for shippers to tell them apart. The only thing left to compete on is price.
The huge web-portals like AMAZON.COM and Alibaba, have shown the way to the customer's brain. First and foremost in B2C, but B2B is just around the corner, and that will hurt the traditional Freight Forwarders and Carriers of all transport modes if they don't embrace the new technology. The web portals have cracked the unique, but difficult equation of low prices and high customer service at the same time. Even worldwide!
Are you too late already? MIXMOVE believe that the race has only just began!
We believe in becoming competitive by utilising your already existing data to build a platform and close all the open gaps between your own systems and your partners- no matter the technical brand name. The transport and logistics sector all over the world - including Denmark, usually is traditional and conservative. But continuing this line of thinking in the future can be costly. The speed of technology is changing the game completely, whether we like it or not. Therefore, the time for decision making is now.