Freightos: Traditional freight models face uncertainty
Where will airfreight growth come from in the future? A better leading question is how can traditional airfreight logistics service providers survive in the near future? According to 90 industry leaders surveyed in the Freightos “Future of Freight Survey,” making the right kinds of technological upgrades and providing value-added services are imperative to survival and future profitability.
The survey results reveal a two-pronged challenge the industry must confront – falling yields and shrinking profit margins – which has led to the “commoditization of core logistics services,” and the changing customer behavior that threatens to make many existing services irrelevant.
Overall, there was little optimism for the business of moving freight. More than 50 percent of respondents believed seafreight will continue to operate at a loss or break-even. The situation was slightly improved for trucking and airfreight, with 54 and 59 percent of respondents expecting profitability. However, more than 70 percent of respondents agreed that value-added services, which include warehousing, 4PL/5PL, 3PL and customs brokerage services, would continue to turn a profit.
Reliability and cost are still central to the demands of shippers with, 95 percent and 86 percent of respondents, respectively, identifying them as key factors during the shipper selection process. Closely coupled with reliability is shipper IT capability. The majority of respondents agreed that tracking (80 percent) and booking management capabilities (70 percent) were most important to shippers.
“Customers are increasingly demanding transparency and solutions: visibility throughout the quote process, through freight movements, in all aspects of customer service,” said Cathy Roberson, founder and head analyst at Logistics Trends & Insights. In the future, senior logistics decision-makers expect the role of freight forwarders to include more direct communication between shipper and carrier, with 73 percent expecting direct air cargo sales to become more commonplace. Still, 63 percent of respondents expect forwarders to extend the logistics value chain with IT enhancements and new services, with many data-driven improvements.
“Cargo has moved in boxes – containers – since the middle of the last century and will continue to do so in this century,” according to Zvi Schreiber, Freightos’ CEO. “But that doesn’t mean that data needs to be sent using 20th century technologies, like fax and e-mail. Real efficiencies can be gained from using the internet and accumulating data with new ‘big data’ technologies in the cloud.”