Freight forwarding, hard hit by economic, modal and lane shifts, seems to be making a recovery.
That is, at least for some providers. For first quarter 2014, Kuehne and Nagle and Panalpina each posted positive gains in volumes for airfreight, 1.4% and 6.0% respectively and for ocean freight, 6.9% and 6.0%.
Financially, it was different story – While Panalpina noted positive gains in gross profit for airfreight and ocean freight 5.0% and 5.0% – Kuehne and Nagel struggled a bit as ocean freight gross profit declined 2.4% and airfreight gross profit slipped 0.9%.
Across the pond, US-based Expeditors International of Washington noted good gains for the quarter with volumes up for air, +6.0%, and ocean, +12%. Financially, subtracting out services, air revenue increased 5.7% while ocean revenue increased 1.3%.
In its SEC 8-K filing, Expeditors noted that airfreight is still experiencing modal substitution favoring ocean but at a reduced rate. Meanwhile shippers are trying to shift as much risk as possible to 3PLs and forwarders as this shift continues, thus, possibly driving ocean costs up according to an analyst note from Stifel.
The changes within the freight forwarding market have been disruptive and true, the market may be experiencing a recovery, but there will likely be additional disruptions as supply chains are redefined by many companies worldwide.
IT has also played a big role in disrupting industries of late, particularly cloud-based solutions. An interesting start-up, Freightos provides such a solution that can be integrated into shippers’ and carriers’ existing IT systems or used as a standalone to provide rate quotes in minutes versus waiting for a couple of days. In a recent interview, CEO and founder, Zvi Schreiber describes the company as “the equivalent of Expedia/Orbitz/Kayak for the shipment of goods rather than people. We help the sellers to automate their quotes online and we help the buyers to compare prices and quality and find the best deal.”
That is probably one of the best descriptions I have come across. Recently, Zvi Schreiber was kind enough to chat about the company and to provide a demo of the system to me. Its simplicity was refreshing and one I could fully relate to. In a previous job, I was involved in arranging airfreight quotes and sometimes it would take days to put a quote fully together. With this system, users can upload carrier contracts and create a private network or use the system as is for air, ocean and road modal pricing and scheduling. In real-time versus days. The system spans around the world and is available in multiple languages and multiple currencies.
As with cloud-based systems, it can be customized based on customer’s needs and reporting/data analysis is included as well. Freightos’ customers include Apex Logistics, belsped, Cargo Group of Companies, Fercam Logistics & Transport and CEVA.
As such, even though the freight forwarding market continues to face challenges due to economies, modal and lane shifts as well as changing customer needs, the market is undergoing additional changes to simplify processes and improve customer satisfaction.
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