Marketplaces have been operating for years in logistics and in the business of freight forwarders. Among the vast offer that exists around the digitization of companies in this sector, these platforms that bring together shippers with a demand for transport and freight forwarding companies that bid to offer their services continue to become popular.
The model they use is a replica of the general marketplaces, changing the role of the actors. The Amazon buyer becomes the shipper looking for a shipment, while the seller is the freight forwarder and, in many cases, many others as well. logistics and transport service providers.
The idea may seem to be a win-win: shippers are presented with a faster and more efficient transport contracting process, and above all cheaper, with access to a very wide range of transport services. For their part, freight forwarders achieve with these platforms an immediate jump to some advantages associated with digitization and the opportunity to meet new customers.
The procedure also seems simple. In the same way that a buyer searches online for the best price to buy an everyday product, the shipper quotes the journey from port A to port B and selects the cheapest option. Everything seems perfect. In fact, the model can be useful for certain highly standardized routes and types of merchandise.
However, the problem with these marketplaces is that they start from a mistaken conception of the activity carried out by freight forwarders. Freight transport and supply chain management is much more complex than purchasing a day-to-day item. The freight forwarder’s raison d’être answers, in fact, to exercise the role of architect of the entire transport chain so that each link connects with the next: organizing the collection of the merchandise, managing customs clearance, storage, space reservation with the shipping company, and a long list of operations to guarantee the success of any shipment.
Furthermore, the freight forwarder is not an intermediary. He is a partner of trust of the shippers, a long-term relationship based on mutual knowledge, in which the freight forwarder is a proactive actor in the search for logistical efficiencies, who is specialized in the activities of his clients, who adds value to their traffic and merchandise. All this accumulated baggage is blown up in a model like that of marketplaces, in which freight forwarders can be replaced at any time by the shipper, because price ends up being the decisive variable in this contracting model.
Rivalry?
There is another element that attracts my attention about marketplaces and that they repeat very frequently in their speech: “We are not here to replace freight forwarders”. It may be true, but the truth is that they don’t need it either. What interests them, and what they are doing, is taking over the market directly, bringing together the customers of the freight forwarders, the shippers.
I am not predicting anything new, because it is a strategy that is already designed and implemented by players that operate in other sectors. Reaching a significant volume of demand makes it possible to control the supply and freight forwarders will be forced to fight with falling prices to continue in a business that will provide less and less added value.
It is time for the transit group consider the risk that the growth of these marketplaces can pose, in the same way that it has detected the threat posed by the growth of shipping companies in new niches of the logistics business. Let’s ask ourselves: What digitization model do we want for the freight forwarding sector? The result of this response will be key to defining the future of this market.
Jaume Archidona, CEO of Freightol
