Analyst insight: Technology is killing middlemen across industries, as new tools and solutions bring brands, manufacturers and shippers closer to their customers. Without some reinvention, traditional freight forwarders could be next.
For years, freight forwarding companies have handled shipment bookings, rate comparisons and tracking services that are now offered by most online marketplaces. Where does that leave the middlemen of the freight world?
Freight forwarders have proven their value in recent times as geopolitical and economic strife raise uncertainty for shippers. Turning to their supply-chain partners — often the freight forwarder — shippers have benefited from changing their sourcing, port and warehousing locations.
This kind of consulting service is an asset that online marketplaces haven’t yet perfected, and may not for several more years.
In addition, freight forwarders are expanding their roles by providing “value-added” services such as customs brokerage, inland transportation and warehousing. In some cases, these companies are transforming themselves into 4PLs, or providers that “manage all resources, capabilities, technologies and the physical execution of carriers and providers required to deliver a company’s logistics needs,” per Gartner’s definition.
Leading freight forwarders such as DB Schenker, DHL, DSV and Kuehne-Nagel have all introduced 4PL services. Traditional 3PLs such as XPO logistics — as well as newer entrants to the space — are doing this, too. Flexport, for example, describes itself as a “digital forwarder.”
The industry is facing a number of competitive threats and will have to continue evolving to stay relevant. As they do, will they still be regarded as “freight forwarders”?
Technology is transforming supply chains by streamlining shipment management, creating visibility — and pushing traditional freight forwarders into oblivion. The survivors are increasingly offering value-added services, but whether that’s enough remains to be seen. In the years ahead, the forwarder will operate in entirely new ways.
Cathy Morrow Roberson is president of Logistics Trends and Insights.