Freightos Is Poised to Transform the Trillion-Dollar Freight Industry
With its routing algorithms and transparently priced marketplace, Freightos is revolutionizing the way people move freight.
It’s easy to forget how dependent the average person is on the international shipping and freighting industry. About 90% of the products bought by consumers are imported, creating an industry worth a whopping trillion dollars and about 7.5% of the US GDP is spent on logistics.
Simply put, freight drives the global economy at deep, essential level.
While this industry is crucial to our everyday lives, it is also one of the world’s most old-fashioned, the most far behind the times, and in dire need of digital transformation.
Many transactions between vendors and carriers are manual and business is regularly conducted using email correspondence or, in the more perilous cases, pencil and paper. The industry is largely based on old relationships between vendors and freight forwarders, granting a huge advantage to long-standing companies with decades of experience, even a century.
All of this has created intransigent barriers for new competition and innovation within the market.
Over the past couple decades, technology has been deployed to innovate and modernize many industries, even revolutionize them. Yet relative to other industries, international shipping has managed to resist such trends and remain a traditional and opaque.
Zvi Schreiber’s Freightos may very well be the startup we were waiting for.
Moving Freight Into the Future
Freightos is bringing a marketplace to vendors. Schreiber studied the success of passenger travel and the retail industry and wanted to apply his findings to modify the world of freight.
Similar to Expedia and Booking.com, Freightos serves as a concierge marketplace, providing quotes for services from many transportation vendors and international freight customers and enabling instant booking. Leveraging its software and platform economics, Freightos has the ability to bring freight quoting into the digital age.
Before Freightos, shipping vendors were obligated to call up freight forwarding companies to collect individual quotes on making shipments, a painstaking and extremely time-consuming process. Putting together quotes for shipping customers could take as long as three days, sometimes longer, with no guarantee the transaction will even be executed.
Schreiber recognized this massive pain point and saw his opportunity to innovate and bring new efficiencies to the market.
In Freightos’s early development stages, Schreiber realized that providing pricing information automatically would be necessary for vendors to view this online marketplace as practical and worth their time.
Bearing that in mind, in 2012, Schreiber and his team focused their efforts on building software that helps freight forwarders automate price quotes.
Fast forward five years and Freightos’s team still receives over 200 spreadsheets a day from thousands of carriers to keep their prices current. Each sheet is entered into a database and integrated with the API, allowing for quicker pricing and rate estimations based on over 350 million unique price points from thousands of forwarders.
Schreiber explained that this is one of the hardest parts of the entire process, that ingesting thousands of massive spreadsheets with specific data for thousands of carriers is quite the heavy lift.
As well, the company needs to consistently refine its routing algorithm, converting various carriers’ availabilities into actual door-to-door routes and according estimates.
Thanks to Freightos, importers and exporters can efficiently browse through freight forwarders online and quickly compare quotes to find the best deal available. This new marketplace approach has increased competition amongst freight forwarders due to the increased transparency and ease of accessing information.
Another huge advantage offered by Freightos: participating carriers and forwarders gain a fresh, significantly cheaper online channel for organic sales.
Changes on the Horizon
As Freightos grows and onboards more regular customers, freight forwarders and carriers must continually improve their services and lower their prices in order to compete. Otherwise, they’ll be undercut and left out of this new version of the freight industry.
Freightos also offers guidance to freight forwarders, offering feedback on their pricing and how it ranks against competitors, which allows freight forwarders the opportunity to make adjustments that will ultimately benefit both their business and their customers.
For now, Schreiber plans on keeping Freightos a neutral marketplace. Listings in the marketplace are ranked solely on price, service, and transit times. No specific freight forwarders receive any special favor and there’s no advertising for higher positioning in the search results.
The positive competition that Freightos fosters in freight forwarding is sure to bring more changes downstream and deliver better results for shipping as a whole.
Freightos currently serves over 20,000 users on its platform and Schreiber hopes to continue increasing this number. Schreiber is well aware that the technology is only so important. The real asset that Freightos provides is the value it offers to the users, which it’s done over 18 million times.
Schreiber originally did not intend for Freightos to become a freight forwarder itself and still doesn’t. Rather, he envisions a platform in which vendors and carriers could easily connect and transact. In the near future, Freightos is planning to extend its services to allow its customers to track individual containers.
Given its trajectory, Freightos’s marketplace for freight forwarding is well on its way to becoming a household name in the international shipping.