December 2, 2021

How E-Commerce Is Impacting Freight Forwarding

Miles Varghese
Miles Varghese
Helping independent freight forwarders/brokers better stay in-sync, collaborate, and improve operations with their shippers/clients. Co-founder & CEO @ Cargologik.com
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E-commerce growth is nothing new, but e-commerce is having a profound impact on the expectations for shippers and freight forwarders. The strong growth rates of e-commerce freight forwarding activity are set to break records, and it’s pushing the global supply chain to its limits. 

As reported by Joan Verdon of Forbes, Adobe “is predicting that global e-commerce sales will reach $4.2 trillion this year, with U.S. consumers accounting for close to one-quarter of that spending.” Such growth was also projected in Q2 of 2021, and as recent weeks have shown, carriers are bracing for an all-out assault on logistics capacity in the weeks leading up to the holiday shipping season. And with the current backlog of cargo and lack of capacity, much of these holidays goods were moved a lot earlier, especially at the larger retailers who are now even chartering their own ships to move goods to keep up with both in-store and especially online demand. 

This slowdown has had a massive impact in the way cargo is moving and potentially altering standard supply chain business practices. With that in mind, it’s important for shippers and forwarders to understand how e-commerce has impacted freight forwarding, how they can accommodate such changing demands and expectations, and how to start thinking about it from a business perspective.

Customer Demand Is a Driving Factor Influencing the Freight Forwarding Industry

Customer expectations and demands are the biggest factors driving evolution of freight forwarding. The e-commerce freight forwarding impact means customers want more freight to arrive faster and without any hiccups along the way. They want two-day shipping and shipping be transparent alerts and notifications every step along the way.

While that may seem trivial, there is only so much capacity available in international and domestic forwarding. Thus, forwarders are faced with a simple prospect; how do they increase capacity without adding capacity due to limited resources? How can an independent logistics provider gain further leverage without the same tech teams and innovation budgets you see at companies like Flexport and DHL?

The answer to that question lies in optimizing all activity and reducing rework or redundancies in all activities across both forward and reverse logistics processes. Less time, money, and resources being wasted on the same activities that rarely produce direct results. Things like “where’s my cargo” texts and getting quote details as quick as possible. Yes, they’re critical to the forwarder or broker, but at scale, weight down the mental load and realistic commercial capacity to deal with and manage  more clients. It’s critical to reduce the unnecessary communications and to address the client directly with automation and better tech – that will also save that shipper more time and money themselves.

Even more interestingly, forwarders are faced with a need to rethink their standard transportation modes. In other words, forwarders have traditionally focused on ocean for volume, but that’s no longer a viable option, especially with bottlenecks and delays growing worse. Essentially, e-commerce has made ocean too slow or too uncertain, forcing more forwarders to consider air transit, which is more expensive and requires more timely collaboration and coordination to grab whatever remaining capacity they can, at an “affordable” price which seems to be ever-growing.

However, it’s all the pursuit of building a better, faster and more resilient forwarding network. The current times will be tough, but for those that make it through, there’s a new era of innovation and tech standing ready to support your business and help your clients at the same time. Improving the customer experience remains paramount in business and software conversations.

Instant Service Pushes Forwarders to Offer Real-Time Status, Around-the-Clock Visibility

Another factor contributing to the e-commerce freight forwarding impact is visibility. E-commerce freight forwarding is built on service and transparency, giving customers the resources to know what’s happening from the comfort of their homes, offices or any other connected environment. Such capabilities depend on real-time access to shipping status, expected time of arrival, possible delays, and total landed costs. These factors contribute to the customer experience, and around-the-clock visibility is table-stakes for shippers and forwarders that wish to avoid returns. After all, e-commerce is associated with a 300%, roughly 30% total returns, higher rate of returns than brick-and-mortar stores, which usually sit around 7-10%. 

As a result, increased visibility can help customers know what to expect, know when an exception might occur, and keep them informed. An informed customer is less likely to return an item than a customer that has zero idea of when their items will arrive. Of course, both customers could still choose to submit the return. The trick is making sure every step is well documented and shared with customers to provide an added perception of service that serves a protective effect against such returns. Further, more visibility lessens the risk of forwarders and shippers by avoiding out-of-stocks, planning inventory needs, and accounting for delays when they occur. 

How Forwarders Can Embrace the E-Commerce Future

Part of this includes knowing what to look for in a system of record or freight forwarding system software. Regardless, choosing the right software is only one-half of the battle, and the rest lies in following these steps to embrace an e-commerce and freight forwarding driven future:

  1. Automate. Automate. Automate. 
  2. Optimize routes and pricing models.
  3. Track data in reverse logistics. 
  4. Expanded the number of connected systems and devices.
  5. Enhance warehouse and inventory management.
  6. Give customers access to shipping data at the time of purchase. 
  7. Integrate with major shopping carts to avoid delays or miscommunications.
  8. Reduce barriers and delays in cross-border shipping. 
  9. Identify and manage delivery exceptions more efficiently with business-intelligence resources.
  10. Embrace digital document management.

Align Your E-Commerce Freight Forwarding Business With the New Age of Logistics by Choosing the Right Software

The shift to more e-commerce activity is going to stay the same for both B2B and B2C transactions, and the trends driving the future of e-commerce freight forwarding will only grow more dominant. Shippers and freight forwarders need to recognize this fact and prepare for a year where more is going to be the mantra, and timeliness of service will separate the winners from the losers. Learn more about the value of the right software and how it can help your team thrive despite the impact of e-commerce by signing up for Cargologik today.

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