December 2006 | Commentary | IT Matters

Technology Moves Forwarders Forward

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Freight forwarders are hardly a lonely breed; more than 10,000 ply their trade in the United States, according to government statistics.

In this brutally competitive business, what makes one freight forwarder or logistics provider rise above the pack to be among the few that evolve successfully into genuine partners to their customers?

There is no easy answer. Hundreds of academic studies and thousands of doctoral essays have been written to provide "scientific" answers to this supply chain management riddle.

Despite many advances in technology, moving a shipment from Point A to Point B remains an inexact science. Too many imponderables intercede between ivory tower academic theory and the harsh world of reality.

This Time It's Personal

The primary attributes of logistics providers today integrate superior personal customer service with advanced technology.

While the pendulum has swung to an emphasis on the technical end of transportation during the past few years, high-tech never will replace the forwarder's commitment to personal service. The forwarder's skill is its ability to blend technology seamlessly into an already high level of personal service.

Despite the changes and innovations in transportation over the past two decades, forwarders or consolidators still are the essential cogs in moving goods around the world. Their indispensability remains more valid today than ever before.

Competition for the consumer's dollar has never been more fierce. Security is becoming tighter than at any time since the Sept. 11 terrorist attacks. The logistics providers that bring skill, experience, manpower, and financial strength to the customer will win the business.

Companies, with their profit margins under attack, are moving proverbial heaven and earth to reduce costs. Logistics is not exempt from this scrutiny; in fact, transportation costs are in every financial officer's gun sights.

Ironically, while they are pressing their transport vendors to reduce costs, shippers are demanding from their forwarders more information, more rapidly, than at any time in transportation history.

Fulfilling these requests costs money, lots of it. The logistics industry has spent more than $100 billion in upgrading technical infrastructure during the past decade. Unfortunately, too many shippers seem to ignore these sharply higher costs when putting logistics contracts out to bid.

Agents Get Their Share

Despite the many financial and operational problems faced by freight forwarders, as well as changes in logistics methodology, agents' share of international freight remains amazingly high.

When I began my transport career 25 years ago, forwarders handled about 90 percent of all international air and sea commerce. That figure has remained constant to this day.

With these extremely high figures, logistics providers play greater, not lesser, roles in international commerce.

Their roles, however, cannot evolve in a vacuum. Shippers must play their part. With ferocious competition for the consumer's dollar, how a company moves its cargo can mean the difference between profit and loss, acceptance or rejection of a product line, and increased or reduced market share.

I will go one step further. Moving its merchandise is essential not only to a company's health, but to its very survival. Because of the critical nature of the customer-forwarder relationship, the agent's role must change from that of an outside vendor to a genuine partner.

Forwarders and their customers must draw closer together, rather than maintaining the adversary relationship that has been so common in the past and, to a great extent, exists even today.

Forwarders and shippers must patch up their differences and establish genuine lines of communication. Real partnerships call for understanding and responsibilities on both sides. Genuine partnerships can only succeed if they are two-way streets.

IT at the Forefront

To that end, information technology (IT) plays a major role in today's international logistics. I believe it is the forwarder's single most value-added contribution to customers. I also believe there has been more hyperbole, overstatement, distortion, and exaggeration about IT than any other aspect of our business.

Our embrace of total supply chain management, with its emphasis on information, means that knowledge about a shipment is just as important as the shipment itself.

In creating IT systems, however, forwarders need to cut the hype and offer international systems that are helpful and complementary to the shipper's own.

Forwarders' computer systems should provide customers with information they truly need, not un-essential reports that clutter up the shipper's own system. Information should be provided accurately, rapidly, and in a user-friendly manner.

The old adage about knowing your business should be amended; forwarders need to know their business and their customers' business. Anticipate customer problems and offer superior logistics solutions. Know what customers do, when they do it, and how they do it.

Forwarders should constantly look at themselves in the mirror. They should rethink the way they train employees, and find better ways to organize their businesses. Great customer service starts with focused training—making people committed to what they do.

We must never forget that despite enormous advances in technology, the forwarder business remains a people business.

Back to Their Roots

Most forwarders today wear many hats—logistics providers, just-in-time and just-in-case specialists, outsourcers of supplies, inventory control, and intermodal managers.

But forwarders must never forget their roots. Their basic function today remains the same as always: moving cargo via land, sea, or air on time, in good condition, and without hassles.

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