Until now, Freightos has focused on helping forwarders quote faster, but since January, the logistics technology provider has been beta testing its China-to-United States marketplace.
Logistics technology provider Freightos today unveiled its online marketplace for international freight rates.
The marketplace, which Hong Kong and Jerusalem-based Freightos said it has been developing for four years, allows shippers to compare freight rates, book, and manage their shipments through a single platform.
The model is based on providing the global freight industry its version of Expedia or Travelocity, Freightos Founder and CEO Zvi Schreiber said.
Over the past few years, the company has helped a collection of freight forwarders and global shippers automate their quoting processes – in essence, allowing forwarders to more dynamically price freight for shippers, and helping shippers receive those quotes in a more timely manner.
“We couldn’t do this four years ago, because the rates from freight forwarders weren’t available,” Schreiber told American Shipper.
The marketplace has been in a beta phase the past six months. For instance, Schreiber said, a shipper could choose an origin of Ningbo and a destination of Chicago and compare rates from around 10 forwarders, select the one it prefers and pay by credit card.
The marketplace has focused on ocean and airfreight lanes from China to the United States, but Schreiber said more lanes will be added on a demand basis and as the platform reaches a certain scale.
“It will take a while to get the scale,” he said. “It won’t happen overnight. But we’ve shown it can be automated.”
The primary customer for Freightos’ marketplace is underserved shippers, ones that are typically outside the scope of most forwarders’ target markets. The idea is to allow these underserved shippers to get access to competitive prices while allowing forwarders to tap into new customer segments without increasing sales costs.
“We hear more and more freight forwarders understanding this (technology change will) happen,” Schreiber said. “And there’s an upside for them. The downside is commoditization, but upside is a lower cost of sale. It’s a channel for them to reach small shippers or those who want to do things online.”
Skepticism over the marketplace model in forwarding comes from those who refuse to accept that basic ocean freight is largely a commoditized offering, Schreiber explained.
“All 40-foot containers are 40-feet long,” he said. “That’s the definition of a commodity. The complexities come with door-to-door and surcharges.”
Users of the marketplace can choose port-to-port of door-to-door services. Schreiber said Freightos has intentionally kept the number of participating forwarders low at the launch phase.
“We have a waiting list of forwarders that we’re holding back until we educate the shippers,” he said. “We need to build up the buy side.”
Prices on the marketplace include customs brokerage fees – as most forwarders have in-house capabilities – but the shipper is responsible for paying any duties itself. The platform focuses on rate transparency, therefore, base rates, surcharges, inland transportation charges and documentation fees are split out. Cargo insurance costs can be added if the user wants it.
Schreiber said he’s going to be patient as the marketplace grows.
“It will take a few years (for larger shippers to use the platform),” he said. “We’re not going to delude ourselves.”
The immediate application of the marketplace for large beneficial cargo owners will be to secure capacity for unplanned freight, Schreiber said.
“The business is becoming more dynamic,” he said. “Online platforms can pick off the unplanned, dynamic part of their demand. Every shipper and freight forwarder is becoming more focused on spot and less contract. The fact that you can get a quote online is only taking this further.”
Indeed, more widespread use of automated procurement tools allows shippers to procure more frequently than the typical yearly or half-yearly cycles upon which companies have traditionally relied, if they choose to do so.
Freightos Marketing Director Eytan Buchman said the pricing model for the marketplace is similar to Expedia, with forwarders paying a small transactional fee when shipments are booked. That differs from Freightos’ software-as-a-service freight rate management offering, AcceleRate, where forwarders pay a fee based on the number of users.
Freightos said importers often have to wait days for a single freight quote and overpay by as much as 40 percent.
“For the SMEs that make up 97 percent of U.S. importers, these waiting periods and inflated prices significantly limit potential for growth,” the company said.
Companies that Freightos automated has aided in building dynamic quoting capability include Nippon Express, Hellmann Worldwide Logistics and CEVA Logistics, as well as the shippers Sysco Foods, Panasonic USA and Marks & Spencer.
American Shipper has reported on other freight marketplaces to pop up over the last year, including Simpliship and Fleet, focused on connecting small and medium-sized shippers with forwarders. American Shipper has also written extensively on the impact startup technology providers are having as potential agents of disintermediation.
Freightos,which received a new round of investor funding last fall, lies somewhere between these pure marketplace providers and those companies providing freight rate management tools to forwarders and non-vessel-operating common carriers, like Catapult, Cargosphere and Info-X.
Freightos launches freight rate marketplace
