Web Developments and Online Technology Looking to Revolutionise Freight Shipping
Logistics and the Supply Chain May be About to Get a Lot More Efficient
With increasing integration in the supply chain thanks to the internet and cloud based technologies, a new start-up is looking at trying to streamline international logistics by taking techniques that have shaken up the tourist industry, and applying it to the worldwide freight sector. Israeli-based Freightos is aiming to use the model used by Expedia to make finding a freight forwarder and getting a quote much more quickly and easily.
Started by British-Israeli entrepreneur, Jerusalem-based Freightos came about after its inventor, Zvi Schreiber, was running his previous venture, an LED light manufacturer, where he became dismayed by the complexities of international freight. Speaking in an interview with Techworld, Schreiber said that:
“During those two years I learned about shipping and how manual and backward it is. It takes days just to get a price quote and there is no track and trace, it is really in the dark ages.”
Freightos clears up a lot of the issues by streamlining the whole process for a potential customer. And at the moment, Freightos hopes that their system will be of real benefit to smaller forwarders who are looking for an advantage against the big names in the industry. Eze Fiszerman, a developer at Freightos whose expertise lies in getting forwarders ready to shift to online sales, explained in the company blog:
“Bigger has always meant better for international freight … but that’s changed. Larger forwarders have advantages of size, complexity and reputation. With these benefits, they get invited to tender for big customer freight contracts. But they don’t so much win them on service – they win on price. That’s good for the big customers – the Starbucks, Walmarts and Apples, who demand (and get) business class service for an economy price ticket. It’s good for the larger forwarders too, who win much of their business this way, as they sacrifice profit margins but compensate by selling to small customers at much higher rates.
“Larger forwarders have another advantage – their brand name recognition. Familiar brands attract small customers, anxious about international shipping and having no real way to compare service levels. For larger forwarders, then, publishing rates would be counter-intuitive. So, when it comes to small customers, they get a raw deal – higher prices and no real way to compare service or rates.
“But it’s about to change. Over the past couple of years at Freightos, I’ve gotten a front-row seat to the freight industry going online. To sell online, means publishing rates. That’s great news for customers, who can now start comparing rates, and like any other online business, they can soon compare service quality.
“Surprisingly enough, it’s great news too for smaller forwarders, if they are good enough. They stand to overcome two existing handicaps – lacking visibility when competing on service, and lacking visibility when competing on price. Smaller forwarders are better at pouncing on an opportunity. I’ve helped dozens of smaller forwarders go live on the Freightos Marketplace. The well-organised ones publish their door to door rates in short order. My record so far has been just two hours.
“Compared to larger forwarders, they have much to gain and little to lose by publishing their rates online. What’s in it for them is, quite simply, visibility. Suddenly, they can reach many more potential customers.”
There are always doubters in the industry about how much influence such developments will actually have on the industry. But with increasing amounts of capital and knowledge being directed at such an obvious need, it seems likely that web based services such as Freightos are going to soon be the wave of the future, with the New York Shipping Exchange (NYSHEX), a digital marketplace for freight forwarding contracts for the global container shipping industry, having announced the completion of its Series A round of funding, which saw investment from Hapag-Lloyd and CMA CGM, along with additional investments from GE Ventures and Goldman Sachs, reaching a total of $13 million.
Founded in 2015, NYSHEX is attempting to challenge issues in the global shipping sector by providing a standardised ‘over-the-counter’ exchange for entering enforceable freight contracts. It is based on proven and relevant principles from the New York Stock Exchange, Chicago Mercantile Exchange and the London Metals exchange.
The Exchange was developed in collaboration with leading carriers, shippers and freight forwarders to create a new and fair standard: The NYSHEX Forward. It was specifically designed for short or medium term shipments, and to provide a fair, secure and digital means for contracting. Carriers provide shippers and NVOCCs with a range of offers clearly displaying the relevant details of their service like space availability, prices and on-time performance. Shippers and forwarders can immediately accept a carrier’s offer on NYSHEX and enter a binding contract