Forwarders must meet digital disrupters head on and adapt, or sink
Forwarders have the power to keep wannabe disrupters at bay and create advantages for themselves – but they must act now, and as an industry.
Speaking at the Canadian Forwarders’ Association (CIFFA) 70th anniversary event in Toronto, Steve Walker, CEO of SWG and founder of SBS Worldwide, urged the industry to adapt to these perceived threats and create new opportunities.
Competitive threats are coming from a variety of companies, including pricing platforms, carriers and new ‘digital’ forwarders.
Citing Maersk’s new positioning as both blockchain leader and logistics service provider, he warned: “Maersk will come for our customers; we need to become 4PLs, and perhaps diversify revenue streams.
“Things are going to change beyond all recognition within the next few years and the challenge for all of us is to transform our sector, or risk being obsolete.”
He called on forwarders to hold their suppliers to account, and gain the upper hand –” they should do more to support our ongoing offering”, he told delegates.
And pointing to e-commerce delivery transparency, he said: “Forwarders have been lazy; we wait to hear from the customer.
“The lines haven’t offered that kind of service to us – we need to make it happen for ourselves. We need to make demands on our suppliers. We are a skilled service and have to promote it better and play to our strengths.
“It is ironic that ‘steamship lines’ have not made their milestones nor those of their suppliers available to us, yet they can now leapfrog several decades to become blockchain leaders. It is a position we should not have put up with.”
He added: “We should become 3.5 or 4PLs. The independent 4PL software is readily available, is easily interfaced with your TMS and will give control of your customer’s supply chain.
He said forwarders were traditionally conservative. “We are also traditionally tight, preferring others to make the running. I think we are failing ourselves; there is willing investment opportunity available to help us expand our businesses.”
Mr Walker urged LSPs to invest in technology and pointed to a 2017 Moore Stephens survey which showed that 30.7% of respondents saw IT investment in terms of internal IT processes first of all, while only 5% saw it as enhanced service offering.
And he said the disrupters – or “service enhancers” had in fact brought opportunities that forwarders were well able to take advantage of.
“They have brought with them investors into our industry, raising the profile, firstly of logistics and now forwarding.”
And the technology must be used for competitive advantage, along with traditional forwarding strengths such as know-how, relationships and networks, he added.
“We presently have all the customer footprint shipping data, and there will be financial value in two, five or 10 years’ time of all that data. Where is our collective freight forwarding voice for data we now own?
“In my view, we need to forge links with a non-proprietary neutral platform. We need a moderated forum where forwarders, together with Customs, banks, customer organisations and governments can try to agree an acceptable platform for secure data.”
He also called on the industry to improve its own PR.
“We need professional PR promoting through all medias. We need to articulate our vision, our soft benefits. We need to fight for the headlines.
“The market is simply too big – $15 trillion by 2025, the cash piles too vast and the investors too numerous for change not to happen.”