Can Forwarders Survive an App Attack?
With rumors that Uber and Amazon may be about to launch their own global freight brokerage businesses, traditional forwarders and brokers are understandably nervous. But the British International Freight Association (BIFA) reacts to current speculation by underlining "the vastly challenging and circuitous landscape" that forwarders and brokers operate in daily.
Uber has already soft-launched Uber Freight, notes the trade association for UK freight forwarders. And, the company has ambitions to cut out freight intermediaries by introducing load-matching apps that would provide real-time pricing, according to Business Insider UK. Smaller start-ups such as Cargomatic, Convoy, and CargoX share the same idea.
Amazon recently unveiled plans to build a worldwide services hub in the U.S. Midwest, and has acquired thousands of its own trucks, which may hint at its plan to take on brokers and forwarders.
But traditional forwarders and brokers have nothing to fear, notes BIFA Director General Robert Keen. He outlines three reasons why:
- Resilience. "I have been working in the industry for more than 40 years and have watched the naysayers and doom mongers in the media, and the wider industry, predict the demise of forwarders and brokers, only for them to have been proven wrong," he says. "In fact, the opposite is true. We have more forwarders now than ever before."
- Complexity. "Freight industry supply chains are highly complex and multi-layered," Keen notes. "I find it hard to believe that there is an algorithm that can successfully absorb, understand, and counter all the challenges that forwarders face every day. How, for example, does an app react to freak weather and negotiate customs issues?"
- Trust and confidence. "Freight forwarders are often described as the 'architects of the supply chain' and for good reason, too," he explains. "They understand the intricacies of the mosaic-like supply chain frameworks that exist. And, most importantly, they have acquired knowledge, experience, and agility over the decades that the tech startups will find almost impossible to match.
"How will they cope, for instance, when a truck carrying expensive and time-sensitive cargo breaks down?" he adds. "Who will arrange for a replacement truck? And who will guarantee the load? Many of these questions cannot be suitably solved by an app alone."