Who’d be a freight forwarder right now? It seems that wherever you look, freight forwarding is under attack, whether it’s by new entrants like Amazon Logistics and Uber Freight, or by people saying that digitalisation renders the concept obsolete. When it comes to ocean freight, we’re certainly in a perfect storm – continually low rates, vessel over supply and economic volatility in parts of the world that have previously over performed are coupling with the impact of digitalisation to put pressure on all parts of the supply chain.
Digitalisation isn’t just a logistics challenge, obviously – it’s something that’s affecting every sector, but when it comes to container shipping, it’s the watch word of 2017. Everyone, from the biggest to the smallest, is talking about it, how it’s going to change the industry, unlock value and ultimately protect us all from market volatility. But what does it mean?
Digital or die?
As forwarders, you’d be forgiven for thinking that it means the end of freight forwarders as trusted advisors acting as an extension of their customers’ team, and the beginning of the sector as online platforms. Look at the number of companies, both traditional forwarders and new players pitching themselves as forwarders, who are making a big thing of their digital capabilities – Damco, for instance, have gone as far as launching a whole digital brand, Twill.
So, is that the only way?
Is it convert to being a technology platform or go out of business? Or can digitalisation mean something else?
If digitalisation has been the watchword of 2017, then surely blockchain is snapping at its heels. Thanks to the two big blues, the concept of blockchain and shipping has got tongues wagging. But what is blockchain, and what does it mean for forwarders?
Forwarding’s silver bullet?
Fortune defined blockchain as ‘a way to structure data, and the foundation of cryptocurrencies like Bitcoin…[It] consists of concatenated blocks of transactions…to share a digital ledger across a network of computers without need for a central authority.’ So I create a block of data, for instance containing information on the verified weight of a container, and I can share it with anyone with access. In its purest form, this can be done without the need for interested parties to all use the same systems – so no changing the data format to fit carrier A’s requirements, which are different to port B’s, which are different to carrier B’s, even though it’s all the same data. What’s critical is that if you’re an interested party, you can not only see the data, but when and where it was created, and no one can alter that. If I’ve captured that information from a weighbridge in North Wales, you can see that straight away.
Think about it – greater transparency, from beginning to end of the supply chain. Not just taking the load site’s word that it was all graded scrap metal in the container, but being able to verify that without needing thirty emails between shipper, forwarder, carrier and port, with a bunch of iPhone snaps that get lost somewhere in the middle and could be from a different container anywhere.
Every silver lining has a cloud
I mentioned blockchain in its purest form before. That might seem a bit evangelical, but like anything there’s the concept of blockchain, and then the reality. There’s several different types and derivatives, like Bitcoin, ethereum, hyperledger and distributed ledgers, and whilst they may all use blockchain as a starting point, ultimately it comes down to the implementers – if people want to keep it a closed shop which requires significant investment in certain types of systems, then blockchains are no different than any other proprietary technology that’s been rolled out in the industry over the last 20 years.
Open and collaborative – even with the competition
When it’s done in an open and collaborative manner, however (admittedly not words we as an industry often use if it means working alongside competitors or even customers), then types of blockchain can change things for the better. Imagine not having to upload data in a different way for every different party involved in getting a container from Tanjung Pelepas to Daventry. Imagine being able to trust the data and share it instantly. Imagine the time and money saved, and how that could be deployed elsewhere in your business – providing an enhanced customer service, with greater time for the expertise and insight that great forwarders can give their clients.
Perhaps that’s digitalisation that doesn’t mean a complete end to freight forwarding as we know it.
Jody Cleworth, CEO, Marine Transport International