September 29, 2020

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Traditional logistics versus technological players

2 min read
Although the rewards of a digital transformation can be significant, so are the challenges to...

Although the rewards of a digital transformation can be significant, so are the challenges to making it happen in logistic industry. Traditional freight forwarders are reluctant to implement modern technological solutions. They still prefer proven methods of customer service and preparing quotes.

What are the most important reasons for this? What is holding them back?

The reasons for the lack of investment in modern software

There are at least three reasons why a freight forwarder does not invest in modern software. The first is belief that creating a state-of-the-art IT environment is a must before launching a digital transformation. But this belief is a misconception. The implementation of modern technological solutions can be phased. Building systems that cover the entire business of the company is not necessary. A better strategy is to focus on areas where it is possible to quickly increase competitiveness.

The second reason for the lack of investment is faith in the effectiveness of currently used solutions. Freight forwarder believe that their customers prefer personal contact with sales employees, they are accustomed to negotiate rates and do not expect any changes. However, the ability to quickly receive information about the price of the service is one of the service standards most appreciated by customers. This strengthens their willingness to use the services of a specific company and builds loyalty.

Finally freight forwarders hesitate before implementing freight rate management software because they don’t know if the investment will bring the expected growth. This is another mistake. The effectiveness of the sales team is one of the most important factors affecting the level of sales. Improving the freight quote preparation process increases the number of potentially supported queries and translates into increased sales.

The emergence of technological competition

One of the strongest threats for traditional freight forwarders is from players that are adopting digital technology as the basis for business model. That lets them compete with a much lower cost base and operational excellence.

More and more such companies are appearing on the market. Their founders believe that the industry is ready for digital change which will significantly improve customer experience.

Investors who are willing to finance a technological startups also believe in the technological future of the industry. Innovations are not only related to the implementation of freight rate management software, but also to cargo monitoring, transport safety and transactions. Instant freight quotes are just the first step in the digital development of the industry. Blockchain, artificial intelligence and others are waiting in queue.

Opportunities for traditional freight forwarders

Fortunately, traditional freight forwarder have many opportunities to apply digital technology. Modern freight rate management software helps not only to improve their operations and grow their businesses but also to maintain their existing customer relationships with acceptable costs and acquire new ones.

But first they must believe that investment will be profitable and will not mean that their business must be turned upside down or rebuilt from scratch.

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