By now the logistics industry is in turmoil for well over a year with no relief in sight as prices for freight continue to rise and capacity issues only seem to get worse. Logistics is an industry which is rather obscure and non-transparent to most people but it has reached the mainstream spot light as the current problems cause real bottlenecks for manufacturing and for people’s everyday lives.
Large companies such as Maersk and CMA CGM which are 2 of the largest shipping companies in the world, benefit from the current crisis as they control a large part of the capacity on the main supply routes from Asia to North America and Europe. Their prices have soared as the demand for their services is higher than the availability of their ships.
Prices for air freight had already soared before the ocean rates due to the lack of flights during the pandemic while road networks also have started to have capacity constraints due to higher demand and lack of drivers in certain geographies or countries such as the United States and England. This clearly has an impact on prices as well.
Digitization was already a big topic before the pandemic but the drive to go digital really has taken of since then and in the shipping industry this means that interest in logistics technology has strongly grown. Visibility has become one of the dominant areas within this field as many companies want to better manage their flow of goods due to the delays and unpredictability of shipping in the last year and need a better overview of where their shipments are and when they will arrive. Project 44 is a company that is showing extraordinary growth in real-time visibility and is the partner of choice of many multinationals.
Logistics procurement is a niche within the logistics tech landscape yet it is getting a lot of attention these days. Traditionally companies were buying freight on a seasonal time schedule with only a few events per year. 1 Ocean RFQ with validity for 6 months or 1 year, 2 Air sourcing events per year at most and maybe once every 2 or 3 years a regional tender for road transportation. Due to the pandemic-related bottlenecks, lack of capacity, strong price increases and regional unpredictability of availability this approach has completely changed and companies need to do more smaller events. Many companies have been doing tenders via Excel which is very manual and takes up a lot of time and are now looking for automation and efficiency in procuring freight services. That is why logistics procurement platforms who specialise in optimization of the freight buying process see a big surge in interest in their services.
Pieter Kinds, Founder of Freightender, a cloud-based logistics procurement platform said this: “We have seen a phenomenal growth of interest of companies that never considered technology before for freight procurement. Midsize companies that used Excel for many years and only did 1–3 tenders per year now want to digitize this process. That means there is an enormous growth potential for us but also for the niche of logistics procurement as a whole as before it was something mostly only very large companies were interested in.”
Kinds mentioned as well that many companies that already have procurement tools in place for different spend categories want to have a specific platform for logistics spend as it differs so much in specifics from other categories.