How medium-sized logistics companies can benefit from the advance of Flexport & Co.

May 24, 2019

Copying solutions while keeping an eye on your own lead

The new digital high-flyers Flexport & Co. continue to penetrate the logistics market with billions of capital. While in traditional forwarding companies real dispatchers often calculate resources, routes and prices for days by telephone, fax and tables, the business 4.0 experts have long since been offering fully digitalized services and offers: for compiling your own transports and access to real-time tracking. Can the classical logistic middle class still keep up in terms of added value for the customer, or even benefit from the new developments? Yes, it can!

Flexport & Co. on mission “Disruption of the logistics market

The digital container shipping company Flexport has just received one billion US dollars in capital from the Softbank Vision Fund. The Silicon Valley-based company will invest it in technological upgrades and, of course, in the development of further international logistics infrastructures. The German start-up Freighthub has also been able to generate a substantial investment of around 27 million euros – and even established industry giants have long since invested millions in the digital transformation of their logistics services. The result: a logistics market in which customers can quickly put together their own offers, book various services and track the location of their freight at any time via real-time tracking. The mission “Disruption of the logistics market” seems to have been a complete success.

Can traditional medium-sized logistics companies still keep pace with their classic offers and services? Yes. Interestingly the solution got anticipated by Flexport itself, by the words on the company’s website:

„Freight forwarders aren’t renowned for their customer service. Multiple representatives across each mode and multiple geographies. Endless games of telephone and email chains. Massive time and productivity lost. These are sadly the norms, typically resulting in dismal customer satisfaction scores.“

Tough words – but it also clearly states what could be done differently for forwarders: making processes more efficient and faster, saving time and productivity.

Step 1: Benefit from the ongoing digitization process

Is digitalization now the salvation for all and everyone? Partly…Because Disruption  does not have to mean complete destruction – the medium-sized freight forwarder can also get away with a disturbance: first disturbed by all the new developments and thus forced to rethink himself. After all, the digital pioneers have already relieved him of the burden of creating innovations themselves – he can now “simply” profit from the establishment and customer acceptance of new digital paths. Especially since modern IT is already available at favorable conditions: For example, the rental of cloud-based solutions at attractive and flexible prices is possible for medium-sized companies. With courage and the will to innovate, many things can be optimized: The automation of manual processes enables more efficient management, the avoidance of wasting time and work and reduces complexity, administrative effort – and last but not least errors at the expense of the customer. Instead, it can be supported more effectively in its requirements by more networking and integration into IT systems through to mobile data access.

However, the advantage of the new tech forwarders can hardly be made up by simply imitating their digital skills. It is much more important to realize where one’s advantage lies: namely in the long-term personal understanding of the customer and his very individual needs. So far, no algorithm, however clever, has been able to do this.

Essential 2nd step: Invest saved time and effort in the customer again!

Because completely digital connection, as Flexport & Co. offer it, means not only regular business but also: as few questions as possible and as little customer contact as possible. And it is precisely this trend towards digitalised and thus anonymous customer contact that enables medium-sized businesses to score points! The trick is not to draw higher efficiency from cost reductions through reduced customer contact, but on the contrary to turn increased customer contact into higher margins. Although the classic freight forwarder must offer his customers digital access to information, he must also be able to advise them personally. If the medium-sized logistics service provider fails to sell its added value to the customer even with a digital connection, it will probably be disrupted in the sense of destroyed. And this added value is just that: Deep know-how of supply chain handling, many years of access to international markets and their suppliers – and especially: the ability to solve individual customer problems with proven and flexible expertise instead of digital standard strategies! Instead of risking the “miserable customer satisfaction” propagated by Flexport, there are decisive options for action:

Take the customer with you on the digital journey

Medium-sized logistics companies must be able and willing to explain to customers where a digital connection is of use to them – and where they will continue to benefit from personal support.

Push personal contact

Whether by phone, e-mail or chat: The personal and experienced contact person with human expertise is a customer added value that medium-sized forwarding agents clearly have ahead of digital providers. In a globally networked world, this advantage must be best available to the customer 24/7, i.e. around the clock.

Offering tailor-made solutions

With their specific know-how, country knowledge and deep insight into the requirements of medium-sized, local customers, local freight forwarders can offer real tailor-made customer solutions. And they have to be in order to stay one step ahead of the digital providers.

Finding the right target groups

Intelligent customer targeting is becoming increasingly important. The motto is: “Find the customer who suits you”. Instead of taking what you can (still) get as a medium-sized freight forwarder, you should search specifically for customers whose requirements match your own offer perfectly.

Customer loyalty through transparency

A more transparent pricing structure and a forward-looking market valuation create a high level of connectivity. Unlike some trends, reliability will always survive – and will always be a decisive factor for customers when choosing their forwarding agent.

Conclusion: Medium-sized logistics companies can profit from the advance of digital forwarding companies by: 1. copying technology from the large digitizers, which saves time, manpower and effort operationally – and 2. reinvesting the savings in real added value for the customer. This means allowing many questions, always being responsive, solving even complicated problems, offering 100% service without giving the customer the feeling that he is incurring costs. No digital solution, however clever, can do this.