The wave of new freight forwarding software is starting to zero in on underserved segments, like smaller forwarders and those in overlooked developing markets.
There’s been no shortage of software aimed at the freight forwarding industry in recent years.
On top of the established crop of logistics enterprise software providers, a recent wave of startups has aimed to give forwarders of varying sizes access to affordable, browser-based tools. These tools typically either automate critical functions, like quoting or documentation generation, or allow forwarders to expand their networks of sales opportunities or capacity providers.
This segment of the logistics software market is starting to become less dependent on features and functions, and more on size.
In other words, a mid-sized forwarder looking to invest in modern technology would likely be eyeing the traditional enterprise-level names in freight forwarding – companies like WiseTech Global, Descartes and BluJay Solutions – or narrower solutions like Catapult, Info-X, Portrix or CargoSphere (which was bought in September 2017 by WiseTech Global).
Larger freight forwarders, meanwhile, have the wherewithal to develop internal systems, and often see it as their duty to build internally to display their innovative prowess.
But that leaves hundreds of thousands of smaller forwarders around the world to figure out what path keeps them relevant. And it is in this market where startups see opportunity. In the past, these smaller forwarders might have joined an agency network to amplify their business opportunities or to tap into a shared technology platform they alone wouldn’t have been able to afford.
The new breed of logistics tech startups provide an alternative to that route. Instead of the agency network being the starting point, the network becomes the result through the use of relatively inexpensive, browser-based tools.
To be clear, no one is really inventing the wheel here. CargoSphere, for instance, has enabled forwarders to share their rates with approved, in-network partners for a decade. Catapult has simplified the rate-to-quote process for large and mid-size forwarders for a similar time. WiseTech, Descartes, and BluJay have provided broader systems for just as long, if not longer.
What’s changed is that the cost of subscription- and browser-based tools have lowered the entry-level price point for transformative technology, and that the need for forwarders to migrate away from relying on people has increased.
We’ve chronicled several of these approaches over the past two years, including (among others):
• Freightos’ drive to build an Expedia-like experience for shippers and forwarders;
• CoLoadX’s vision for a sales-expanding marketplace between forwarders and neutral NVOs;
• iContainers’ ambition to provide a fully automated forwarding interface for small shippers;
• Simpliship’s API-led marketplace for a curated set of forwarders;
• Kontainers’ aim to provide large forwarders with a more useful digital front end;
• And Swivel Software, a new entrant in the forwarder ERP system, led by the former founder of Catapult
This doesn’t even count the work that existing software providers are doing, nor the initiatives the top forwarders are undertaking internally (including use of, and investment in, some of the startups in this space).
I recently spoke with two of the upstarts that are trying to put tools in the hands of small forwarders or forwarders in regions that have been virtually neglected. Those forwarders that comprise the long tail of the market.
Eugene Reznikov, the Hong Kong-based representative of freight forwarding software Quotiss, said his company’s approach is to give small forwarders tools to compete with the bigger players in the space. Quotiss essentially takes static documents, processes them, and normalizes the data within them to give smaller forwarders the ability to quickly manage carrier contracts and quotes to customers. The company calls itself a sales automation platform, and offers different subscription-based price points based on the company’s size (from $99 per month for small forwarders to $1,999 for larger ones).
The system is, at its heart, designed to drastically reduce the time spent entering data on both sides of the transaction. And again, this is not a groundbreaking concept. But it is the ambition to put these advanced tools in the hands of relatively small, unsophisticated, and undercapitalized forwarders that is new.
It’s not so much that the established breed of forwarding technology providers, and even some of the newer startups, have forsaken this large and fragmented market. It’s that this market is elusive, broken up not only in sheer numbers, but across every continent and by dozens of different business cultures.
In other words, the conversion point for a digitally-focused small forwarder in Hong Kong is likely to be very different to one in Miami, or Warsaw, or Sao Paolo.
To that point, I also recently spoke with the leadership team at Shipmnts, an Indian-based forwarding software provider that is going after a distinct market: forwarders in its domestic market.
While some companies based in India target forwarders in more developed regions, Shipmnts, led by Karan Shah, a former Indian ports and logistics executive, saw an opportunity to arm India’s own forwarders with a more modern, digital framework. Shipmnts’ goal is broad, and entails providing a more expansive set of tools within a single system. That includes integrating with Indian customs via APIs, providing transportation visibility tools that Indian forwarders often lack, and even providing back office systems as basic as electronic invoicing.
Above all, Shipmnts is attempting to infuse local understanding of the pain points of Indian forwarders and the logistics environment at large into its offering.
To reiterate – these concepts are not new, but the execution of them is challenging, and the focus on underserved markets is signifying how deep and wide this forwarding technology revolution really is.
And it’s really only just begun. The number of developing nations that require software companies developing solutions for the unique constraints of their market is vast. The tail of this market is seemingly endless. Expect more startups to emerge at all size levels, from digital front ends like Damco’s Twill Logistics, to mid-tier visibility and rate management tools, to marketplaces and digital sales systems for smaller companies.
As we’ve written before, the forwarder isn’t going anywhere anytime soon, and now the tools at their disposal are starting to reflect that.
Targeting the long tail
