Updated: Aug 24, 2019
For decades, shippers were told that they had to settle for the status quo because freight was all about experience and interpersonal relationships.
“We’re in an era where complexities melt away in the face of digital capabilities,” says Eytan Buchman, VP of marketing for the online freight marketplace Freightos. For decades, shippers were told that they had to settle for the status quo because freight was all about experience and interpersonal relationships.
Freightos contends that those aspects still matter, but that technology is just as important. Buchman’s company is part of a new breed of logistics companies that are bringing the “passenger side” experience to the freight world.
Online freight marketplaces can now use routing and pricing algorithms to analyze thousands of rate sheets from hundreds of carriers, and millions of potential routes to optimize route and provider selection. “That’s not to say that individual expertise isn’t necessary,” Buchman says. “We just want to combine the two.”
What prompted Freightos’ founder to start the company, and what gap in the market was he looking to fill?
Eytan Buchman: Prior to Freightos, the company’s founder, Zvi Schreiber owned an electronics company that frequently imported from China to the United States. It’s one of the world’s busiest trade lanes… but it took days just to get a freight quote, while the actual shipping process, from a customer’s perspective, felt incredible dated. So when that company was acquired by General Electric, he decided to create a company that would provide a frictionless global freight experience, replicating the e-commerce experience – instant prices, online booking, seamless digital freight customer service – for the international freight industry.
What differentiates your business model from other conventional forwarding services?
Freight is a service industry. Actually moving goods is a commodity, with many providers using the same carriers and routes. Unlike the digital freight forwarders of the world – like DAMCO’s Twill Logistics or Flexport – Freightos is bringing transparency and ease of use to customers by simultaneously connecting importers or exporters to multiple forwarders or logistics providers, with instant quoting, booking, and improved shipment management. We’re strong believers that customer-service oriented providers will not go extinct (although they will need to up their game), just that the ways they reach new users, provide that service, and differentiate will need to evolve. As a matter of fact, we bring that same expertise; our freight rate management and online sales technology is used by over 1,000 freight companies internally, generating thousands of instant quotes daily.
Can online freight forwarding manage the complexities of international shipping as well as conventional forwarders? What about customs brokerage, warehousing, and last mile?
We’re in an era where complexities melt away in the face of digital capabilities. Our routing and pricing algorithms can parse thousands of rate sheets from hundreds of carriers, and millions of potential routes to optimize route and provider selection. That’s not to say that individual expertise isn’t necessary; we aim to combine the two. A survey we conducted across nearly 100 forwarders found that 75% that the future of freight customer service is much like service at a bank – powerful automation to handle the majority of support, augmented by humans when necessary.
What are some major impediments that small and medium sized importers and exporters face, and how can technology like Freightos’ platform help?
Another survey we conducted across 500 US importers painted a bleak picture. Over half of smaller importers spend $10,000+/month on freight, making them sizable sales targets. But it takes about 50% of companies over two hours (or $100 in labor) per shipment, while under 75% of their shipments are fulfilled on time. The most interesting statistic from my perspective is that nearly 50% of all importers (47% to be exact) still use spreadsheets. Logistics providers – whether carriers or forwarders – are evolving to provide more transparent and improved service. But there’s an important role for aggregators to play, helping companies centralize operations and manage shipments across multiple providers in a one-stop shop, maximizing their time and money.
What steps can shippers take to offset volatility in the shipping market, and what tools do online freight platforms provide in this regard?
We are in an age of the empowered customer. Free tools, like the Freightos International Freight Index, provide instant visibility into freight trends. Reviews about providers, instant costs, digital tracking to reduce dependencies, and others tools all put the ball back in the shipper’s court. A little time spent up-front on planning means huge savings down-funnel.
How does Freightos open the import/export market to a wider range of customers?
We bring freight shipping online. Global trade has shifted, with a rise in direct-to-consumer services, as companies stretch across the world with digital sourcing, digital importing, and digital sales. Last year, an estimated 200,000 Asian sellers started selling on the Amazon Markeplace, driven by better connectivity. Freightos helps companies from Marks and Spencer to small board game companies import better, with on-demand access to over 50 freight forwarders.
What sort of impact is carrier consolidation having on the forwarding market, and on Freightos in particular?
Underlying stability for ocean freight is important for shippers as well; one only needs to look at the impact on Hanjin’s bankruptcy to remember the impact for shippers with cargo onboard. Carrier consolidation has so far not introduced that same stability but as larger companies compete for market share, we may see improved competition, manifested either with better customer service or unsustainable, rock-bottom prices. There continues to be underlying challenges in pricing transparency though – see the chart below for a snapshot of pricing ranges on one day and one port pair last week. For forwarders, we’ve already seen that profit centers are shifting from core international freight to ancillary services, like consulting, customs, and warehousing. As an intermediary that connects shippers to providers, Freightos continues to provide value by helping shippers find the right balance of price and service for every individual shipment.
With US-China relations deteriorating, what impact will that have on the import/export business, and what can people in these sectors do to protect their businesses?
Let me quote our CEO, Zvi Schreiber, who recently said the following: “Three days after his inauguration, Trump withdrew from the TPP with much fanfare, citing that it was a bad deal. The eleven other countries, which collectively represent 14% of the world’s GDP (UN), apparently felt otherwise, signing the TPP in March 2018. Since then, Trump has been on an anti-trade rampage, instituting tariffs that harm not only US importers and consumers but US exporters as well.
Open trade, combined with technology, has been a boon to hundreds of thousands of US businesses, small and large, as well as to the global economy. I consistently hear this echoed by the many Freightos importers – big and small – who source online, sell on Amazon,other platforms or, yes, even in stores, and leverage powerful inventory management tools. Technology is making the world more connected, empowering businesses globally. Flip-flopping on trade policies, imposing tariffs that will do US businesses more damage than good, attacking Amazon, a platform bringing efficiencies to millions of US businesses, and missing out on key trade agreements, is counteracting these powerful strides.”