Freight forwarders organize the transport of goods for their clients from the point of dispatch to the point of receipt. This makes them indispensable to the logistics and supply chains of most companies. How they provide their services can vary greatly. Both in terms of the modes of transport used and the digitization and automation of processes. Digital freight forwarders have been considered pioneering in the logistics industry for some time. But is that rightly so? And what exactly do they do differently?
A while ago, almost all trade publications on the digitalization of logistics postulated the triumph of digital freight forwarders and their business models. They were credited with the ability to disrupt, i.e., to break with existing service providers and their offerings. The reason for this is automation and the associated optimizations with which they bring the efficiency of processes to a new level. And this level - according to the common thesis at the time - could no longer be achieved by the classic forwarders.
In the meantime, the hype surrounding this development has cooled down considerably again. At the same time, the impetus for forwarding companies and transport processes continues to be effective. What has happened since then? Two diametrically opposed poles with equivalent competencies have moved toward each other: the digital freight forwarders as startups with their penchant for integrated processes and the "classic" logistics service providers with their process expertise. What they have created since then is a middle ground between their two perspectives, which can also be described somewhat pathetically as the second digital revolution in logistics.
What is actually a digital forwarder?
As described at the beginning, the term freight forwarder refers to companies that organize the transport of goods commercially. In the narrowest sense, this includes the transportation of goods. The individual tasks involved can vary considerably depending on the order, the freight, the destination, and the modes of transport used. Digital freight forwarders also meet this definition, even if they do not have their own assets for these services. With their streamlined digital organization, they have changed the approach to transport logistics so much that they seemed to have the potential for disruption in the meantime. It is therefore interesting to look at where and how they have changed familiar processes.
In essence, digital freight forwarders have taken on the entire order processing of a freight forwarding company and consistently digitialized it in all areas, from sales to planning, cargo handling, transport and status management to billing. The goal is always to capture information as it arises. To achieve this, the young companies have linked all subareas in IT via interfaces in a system that is based on information in real time. They have eliminated paper as a means of passing on information from all processes.
How digital processes are revolutionizing transport logistics
With this radical digitialization of structures, the newcomers have made something possible that previously seemed impossible: the automation of workflows along the entire supply chain. In the process, the management of the digital freight forwarders benefited from an advantage that all startups consistently have: With their new start on a greenfield site, they were not tied to existing structures that tend to prevent change. They were therefore able to succeed in the revolution without destruction. As a result, they subsequently demonstrated at high speed the potentials associated with integrated processes in the transport of goods. Those potentials arise from the consistent linking of all participants along the value chain: shipper, forwarder, carrier and consignee. Via digital platforms, they receive information in real time whenever there is a change in status. This creates transparency on the progress of processes and even the option of offering completely new services. For example, they calculate the estimated time of arrival (ETA) of trucks at their destinations at loading points in production or at warehouses, as well as at consignees. This is made possible, for example, by mobile apps in smartphones, tablets or the on-board computers of trucks and the associated telematics systems. The digital freight forwarders benefited from this data for organizing their transports, while their shippers' customers improved their planning with the early information on delivery.
Unlocking potential to improve
As advantages of an integrated supply chain planning in modern IT solutions became known, digital freight forwarders have since turned into trailblazers in the logistics industry. In the meantime, many established logistics companies have proven that they have enormous resilience to the challenge posed by IT-driven startups. However, only if and by digitalizing themselves and using similar means as the newcomers. If they succeed in this transformation, they will add the advantages they have acquired over the years: close relationships with customers and carriers, highly differentiated established processes, and their handling facilities. The smart IT solutions of the startups do not have enough to counter these material and social assets everywhere for disruption. However, in subareas such as limited and full truck loads, which do not require transshipment, they benefit enormously from their efficient organization and the comprehensive information from the drivers' mobile apps - right up to the transmission of the proof of delivery (POD) in real time.
Digital freight forwarders act as accelerators for Data integration
"No app, no business!" This is what Professor Michael ten Hompel of the Fraunhofer Institute for Material Flow and Logistics in Dortmund predicted for logistics. Digital freight forwarders were soon to pick up on the underlying idea and integrated all areas of their services along the supply chain into IT systems and platforms. In doing so, they have become trendsetters for the industry and have generated digitalization pressure. With great success! That's why some of them have now decided that instead of transporting goods, they would rather offer software solutions for these tasks - and thus no longer act as a freight forwarders. And their traditional counterparts have found a new high efficiency with digital processes.