Navigating the Transition to ‘Digital’ Freight Forwarding

The logistics sector is notorious for being more analog than modern, and the time is ripe for digital transformation.

In this article we break down what it actually means to become a digital freight forwarder, explore the benefits of prioritizing a digital transformation and provide some practical advice for logistics service companies looking to get started on their digitization journeys. 

What is a digital freight forwarder?

Just like traditional freight forwarders, digital freight forwarders are brokers that purchase freight capacity and arrange transportation on behalf of their customers. The essential difference between traditional forwarders and their digital counterparts lies in how each interacts with their customers. 

Whereas traditional forwarders often rely on manual processes and large operations teams to arrange and communicate updates on shipments, digital forwarders put technology at the centre of their customer facing operations to allow much of this to occur without 1:1 interactions. 

Benefits of digital freight forwarding 

Undergoing a digital transformation can help freight forwarders and other logistics service businesses deliver an improved customer experience, differentiate from the competition and reduce operational costs. 

Enhance your customer experience

In a technology enabled world, customers expect everything to be transparent, quick and simple. The frictionless ease of real-time shipment tracking dashboards and integrated document sharing is greatly preferred to the alternatives of engaging in back-and-forth email chains, completing forms in Excel or looking up shipments in carrier portals.

It’s no secret customer service can make or break a customer relationship – by enabling customers to do what they need to do independently of your team, you’ll reduce the number of opportunities for the relationship to go awry. 

Differentiate from the competition

When customers can work with you in a way that is convenient for them, they will be happier and remain customers for longer. In a market that is primarily driven by freight rates, a reputation for convenience and quality service can help you stand out from other service providers and win more business.

Reduce costs and boost profitability 

According to a 2022 McKinsey report, freight forwarder net profit margins have dropped to an average of five percent, a 10 year low. The persistent profitability challenge for forwarders is largely driven by the reality that there are few operational economies of scale to be realized as operations expand. More freight and more customers typically means more headcount. When incremental efficiencies are gained, they are often offset by volatile shipping rates. 

By placing technology at the centre of your offering you can drive sustained efficiencies by automating high-frequency, transactional interactions such as providing details for a new shipment or accessing up to date tracking information. In doing so, you’ll free up teams to focus on higher-value tasks, reduce your operational cost structure and boost your bottom line. 

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How to become a digital freight forwarder

Becoming a digital freight forwarder is as simple as implementing technology to support key elements of your customer experience. 

Given the operational burden associated with tracking goods, many freight forwarders choose to start their digital transformation with the implementation of a tracking and visibility platform to supply customers with on-demand information on the whereabouts of their shipments.  

Over time, the digital offering can be expanded to include pre-shipment workflows like order bookings, quote generation and invoicing.

How freight forwarding software can help you avoid a common mistake

A common mistake made by freight forwarders embarking on their digital transformation journey is wanting to build a custom technology solution. Building and maintaining software is expensive and complicated. Add to this the fact that software isn’t your core business and you can quickly find yourself in a situation where you’ve dumped money and time into a platform that fails to live up to the initial vision.  

White-label tracking portal solutions like Beacon (watch a 3-minute demo) provide a plug and play option that will help you avoid wasting money building your own tech while greatly reducing the time needed to deliver an enhanced customer experience.