Research has once again shown the increasing importance of IT for logistics service providers and forwarders. Transportation Intelligence conducted the Global Freight Forwarding 2016 study and came to the conclusion that forwarders must primarily be agile and customer-oriented, if they want to survive. A Transportation Management System is one of the most important ways to reach these goals. A sound foundation in the shape of a modern TMS is an absolute must in this context.
Despite the fact that major forwarders control more than half of the global market, the forwarding market is still fairly fragmented. Major contractors therefore acquire more power, but according to the researchers at Transportation Intelligence (TI) there are more than enough opportunities left for small and medium-sized operators, provided they invest in TMS. In this context the priority should be an investment in a TMS, a software that provides support in the registration of transports and the processing of transportation transactions. A TMS also helps to quickly plan rides based on the correct data and rates.
‘More than ever forwarders must be agile and able to adapt to customer needs’. With this comment, TI refers to the changes that will be made due to new major players such as Amazon, for example. According to TI intelligence, clear strategies and IT must go hand-in-hand in order to capitalize on the changing markets due to these new players. Basic IT, such as Transportation Management Systems and online platforms must be in place. Accurate data combined with these TMS tools must allow to capitalize more quickly on customer needs.
A good TMS is especially important since the TI study suggests that the time used by forwarders to respond to customer requests is often much too long. The number of manual operations is also disproportionately large. Forwarders, but also logistics service providers and hauliers too often depend on communication based on e-mail and telephone. Not only when contacting hauliers, but also when drawing up offers and making bookings. That is also why the image of forwarders, according to TI, is labelled by shippers as ‘technologically low’ without timely responses. Furthermore, this image even leads to the question whether traditional forwarders will still have a reason to exist in the not-too-distant future. Investments in TMS are necessary and every step taken in this area is one in the right direction.
A study initiated by TI in 2015 suggests that the average time needed by a forwarder to make an offer is 90 hours. The fastest answer still took 30 hours. Out of all the questioned forwarders, only five companies seem to have followed up. They wanted to know whether they had landed the order. Furthermore, the study showed that there was 41% difference between the lowest and highest offered price. TI describes this as a lack of consistency due to the absence of transparency in the logistics chain. According to TI, the lack of insight into the costs of a transportation is primarily the result of insufficient investments in new technologies.
The companies that notice that they are losing ground to the competition, according to TI, can find solace in the fact that investing in TMS today is easier and initially cheaper than 5 to 10 years ago. There are plenty of choices, but during orientation modularity should be a prerequisite. Not every company is waiting for a full package. Building a system in modules, as is possible with TAS-tms, is just a very smart move.