Challenges - Freight Forwarding Industry
“Static” pricing leads to lost revenue opportunities
Digitalization is already making an impact on the freight forwarding sector. Decisions are taken in ever shortening cycles, and markets are becoming ever more transparent.
Today, however, the impact of each customer on freight forwarding networks remains relatively opaque. Freight forwarders apply their standard rate sheet based on network cost of the past, and apply surcharges or discounts rather than basing rates on actual services cost. In the recent past, freight forwarders did begin to simulate actual cost of shipping patterns, but the process has historically proved to be a very time consuming endeavor and is typically only applied to large tenders.
Moving forward, companies hoping to remain competitive must evaluate each new (or lost) customer based on their real impact on the anticipated network structure. With that knowledge, costing and pricing will be more accurate and can help optimize customer related decisions. Companies will be able to identify cost prohibitive customer requirements as well as requirements that can improve capacity utilization (such as customers with less demanding lead times who can be utilized for optimizing capacity use).
By helping to aid the transition from fixed quotations to spot pricing, Logistics 4.0 will change the world of freight-forwarding. Transparency and collaboration will drive reduced transactional and administrative costs for individual provider selection, resulting a more dynamic market. Customers will no longer contract their needs with one provider but will select between all available providers, choosing the right provider and the right shipment type based on shipping specific requirements, lead-times, and price.
Manual, past-oriented pricing processes will be relegated to the past and replaced with automated, real time systems that pair customers with the suppliers that can best meet their needs. Freight forwarding companies who hope to participate in this new market will need to develop intelligent ways of evaluating each price request in real time so that they can collaborate on actual cost driven pricing based on forecasted effects on the traffic network. This will allow freight forwarding companies to price their shipments adequately and identify potential losses, thus maximizing margins on each order. Yield management solutions facilitate the required behaviors for freight forwarders similarly to solutions already implemented in the aviation industry.
Freight Quotation excellence will be a key driver for successful freight forwarders. flexis’ Dynamic Quotation module enables providers to generate cost-driven price sheets for fixed contracting as well as dynamic real time pricing based on forecasted real cost of transport execution. flexis allows you to make better decisions and to outperform on the market.
flexis Solutions - Freight Forwarding Industry
flexis Dynamic Quotation Generator
Learn more about flexis Dynamic Quotation Generator - Our Dynamic Quotation Generator is a dynamic price engine built for customized quotes based on: existing cost structures, shipment data, lead time requirements, and billing model