Executive Insights: Portrix Logistic Software’s Global Head of Marketing, Christian Sørensen, on rate volatility, small shippers, and more…
Shippers are becoming increasingly active stakeholders in the logistics business, forcing carriers and forwarders to adapt. One area in particular where logistics companies are struggling to meet demand is in visibility. But time is running out. Sørensen explained that the shipping industry is currently “ablaze with talk about digitalization,” and added that many shippers are struggling to take advantage of the new possibilities. Providing shippers with technological insight will soon be expected, not offered as a marketing sales-point.
So, what’s the trick?
According to Sørensen, small shippers, and their logistics partners, need to keep information centralized, and standardized. He told Shipping and Freight Resource that such companies need to work with partners to keep abreast of changes in the market and evaluate their options to find the best and cheapest way to move their goods. Sørensen urges these shippers to take advantage of the online quotations forms that are become available and start pushing their partners to transmit them rate information directly into their own dedicated rate database. That, he says, will allow them to query rate and transport mode options that go beyond what they may have already contacted.
Shipping and Freight Resource: Can you start out by talking about how today’s outdated procedures complicate global trade, and where you see biggest need for improvement?
Christian Sørensen: To me, the world of logistics and global trade is moving forward at an unprecedented pace compared to the last decades with almost everyone doing various initiatives to try and adapt. And whilst most of these initiatives are good and will lead to an improved experience for customers and most likely lower cost for some of the players, the system landscape of many parties is still based on technology from the last decades. This will prevent the world from truly adopting these new possibilities at the speed which most people would like and also make it difficult to streamline and optimize processes for handling imports and exports.
What questions should shippers be asking themselves about their shipping strategies, and their technology strategies?
The shipping industry is currently ablaze with talk about digitalization, however the question is whether Shippers are truly able to take advantage of the new possibilities that come out. I do come across some shippers that are already trying to redefine their logistics for logistics 4.0, but the majority still seem to be waiting to see what will eventually be the new normal. If I was in a shipper’s shoes, I would look to steer the discussion as much as possible to enable me to better forecast cost, improve certainty in my shipping patterns and become more integrated with my various partners so that data and information is transferred digitally and instantly. This would also enable the Shipper to respond faster to changes in their own customers behavior.
How does shippers lack of information hurt them when it comes to shipping costs, and what can they do to address that?
The logistics industry is becoming increasingly dynamic and rate volatility goes up almost every year. Furthermore, changes in legislation or in business procedures, lead to new surcharges or cost elements being added making it increasingly difficult to compare and evaluate shipping options against each other. It is therefore vital to have information easily and quickly at hand, so that you can immediately understand where you are in that picture and understand the cost impact that any changes of partners ultimately will have, instead of just looking at an FCL or a W/M price. This information should also be built into their ERP landscape so that they work within one operational environment where options are easily comparable and the same data can be used throughout the entire shipping process.
How big a concern are Demurrage and Detention costs, what steps can shippers take to offset/accommodate them, and what role do forwarders play?
For many shippers D&D costs are a very sensitive topic, as a lot of them will claim that they do not occur, yet it will often be widely known within the organization that they are there. The issue is that D&D costs often fall between chairs in most organizations since the shipping costs are booked to the Order and that Order is closed before an eventual D&D invoice comes in, meaning it may be attached to a different file. It therefore often becomes very difficult if not impossible to see what shipments caused what costs and if there are always shipments or lanes attracting more costs than budgeted etc. I see both the Forwarders and Carriers helping shippers manage this much better, by improving the visibility of what agreements the shipper has with them, where their containers are in the supply chain and then automatically alerting them in case containers are about to incur costs. When costs do occur, it should be possible for the shipper to see which containers took what costs and why, so that the approval of such invoices can happen much quicker and smoother. Overall, I would see shippers push the industry to build an eco-system where D&D costs are immediately visible to all parties and instantly agreed upon so that the invoices are triggered upon the end of the journey of the shipment/container.
What sorts of challenges do smaller shippers face when booking multimodal freight, and what can they do to manage the process and keep costs low?
For smaller shippers it can often be difficult to get an overview of what options there is available in the market to ship their goods from point A to point B and to understand the various price models and surcharge structures that make up each transport option. A lot of smaller shippers don’t have the bandwidth to negotiate many different ways of moving the same cargo and therefore often end up moving goods in the same way as they always have, without fully understanding the constant changes in routings and prices that might make other combinations of modes either cheaper, faster or with less handover points. A small shipper should however not underestimate the value of keeping information centralized in a standardized way, work with partners to constantly keep them abreast of changes in the market and evaluate various options for how to best and cheapest move their goods to the desired destination. I would therefore also urge them to take advantage of the online quotations forms that are become available and start pushing their partners to transmit them rate information directly into their own dedicated rate database, allowing them to query rate and transport mode options that go beyond what they may have already contacted.
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