December 2004 | Commentary | IT Matters

Freight Forwarding Goes Native

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The future of international freight forwarding technology lies in the adoption of Internet-based solutions. To date, however, most freight forwarders have lagged behind when it comes to embracing this technology and making it part of their work processes.

An Internet-native international freight forwarding system offers the ability to utilize electronic data exchanges, and is easily accessible from anywhere in the world with an ordinary web browser.

The use of Internet-native technology has helped freight forwarders streamline and automate the freight forwarding process to an unprecedented degree. Following are additional benefits of an Internet-native system.

Reduced courier costs. While paper documents may never be fully replaced, the exchange of "paperless" PDF documents over the Internet is now a real possibility in many export transactions—especially in the case of large companies with global supply chains. Often such companies export to themselves, shipping to their own affiliates in Asia or Europe. Many also have long-standing relationships with certain large customers abroad.

In these scenarios—intra-company or "on account" exports—the transfer of cargo does not require a letter of credit, and companies do not have to send hard-copy bills of lading around the world.

Electronic documentation accessible in an Internet-native freight forwarding system suffices, cutting courier costs significantly.

Consider a $2-billion company with 4,000 export shipments per year, 70 percent of which are either on account or intra-company shipments. If average forwarding fees and courier fees are $120 and $60 per shipment, respectively, the company's total forwarding expenses are $720,000 per year. By eliminating couriers for on account and intra-company shipments, the company saves $168,000 per year—23 percent of the total annual freight forwarding expenses.

Reduced messaging costs and improved forwarding execution. The Internet provides an inexpensive method for exporters to send export orders to their forwarder electronically using XML-based messaging.

Both large and medium-sized exporters now have access to inexpensive XML-generation tools that can be used to format export orders for transmission over the Internet to their freight forwarder.

This reduces messaging costs and brings down the electronic communication barrier between exporter and forwarder, improving both data accuracy and export shipment execution.

Improved collaboration among shippers, forwarders, consignees, and carriers. Shippers seeking order status information often need to call their forwarder. But an Internet-native forwarding system allows shippers or consignees to log in from anywhere and see exactly what the forwarder sees, allowing them to track the progress of a shipment through the export process.

If questions arise, the forwarder and the shipper can each look at the order in a common online system, and then resolve the issue quickly and efficiently.

Event-driven issue resolution. Some lead logistics providers (LLPs) are deploying sophisticated event management systems that allow them to monitor a shipment's in-transit status, and raise any exceptions to the correct person for proactive resolution.

By tying an Internet-native freight forwarding system directly into an in-transit visibility and event management system, LLPs have the opportunity to monitor and manage the export process to an unprecedented degree—from receipt of the order to delivery at the foreign destination.

For example, rules in the event management system can be configured to alert the forwarder that a shipment's documents have not yet been dispatched, allowing the forwarder to quickly get the documents out and meet the deadline.

LLPs who have such systems can extend their services beyond freight forwarding, into monitoring the end-to-end execution of a shipment while in transit. Rather than simply being a freight forwarder, the LLP becomes the "global supply chain caretaker," finding execution issues in real time as they crop up, and resolving these as quickly as possible.

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