For many shippers, air freight wins out on speed and convenience and FCL (full container load) seems a better deal on cost. But, that often means LCL is overlooked as a mode when it would have been the better option.
But for several reasons, that perception is changing, many shippers are now seeing LCL in a new light:
- Forwarders are increasingly providing direct LCL services, reducing the need for trans-shipment.
- General improvements to the reliability and speed of ocean freight have increased LCL’s stakes against air freight.
- Air freight’s reputation of convenience, ready availability and reasonable pricing took a hit last peak season when demand outstripped supply. Many shippers were faced with paying excessive prices to make sure their goods finally arrived.
- Much of its demand is being driven by the continuing growth of e-commerce.
The Man In The Middle
Ecommerce’s impact has presented global forwarders with a tremendous opportunity, but also a challenge – to overcome smaller shippers’ traditionally higher cost to serve. Ecommerce also comes with a reputation as being a disruptive force, and most global forwarders would rather ride the wave than get dragged under. The starting point is creating good online solutions, which is easier said than done. Man in the middle, DHL’s Global Head of LCL, Sanjay Tejwani, understands the size of that challenge.
“As an industry, we’re not where we should be. We’re lagging behind many other industries in providing online solutions including easy online transactions.”
Having worked with Maersk in the carrier business for ten years, and more recently with different facets of freight forwarding within DHL, including the position of Regional Head of FCL in the Americas, he understands international freight well. But he looks outside the industry, “to the other side of the plane”, for inspiration.
“Look how easy airline passengers purchase tickets online, get boarding passes, and the rest of it. We can emulate that, despite the obvious complexities.” The key, he says, is getting all the parties to work toward the same goal, providing a seamless experience for the customer.
For Sanjay, in many respects, looking at freight from the customer’s perspective is key.
“We’re constantly using customer feedback to enhance our online capabilities. Better still, we are getting closer to releasing a more robust instant online freight quoting and booking tool, that I am confident will meet, and even exceed, customer expectations.”
This is an aspect across the industry in dire need of improvement. Over the past three years, using mystery shopping surveys, Freightos has benchmarked getting an LCL quote from the top twenty global forwarders. The results have been poor. Less than half of the surveyed forwarders respond with a quote, often taking a week or more in the process. But there’s been some progress since the first survey, for instance in the number of forwarders providing request form wizards.
Putting The Customer In The Middle
Sanjay sees online quoting and booking as an important first step. Beyond that, there will be more automated backend processes, better shipment tracking capabilities, and better integration with customer systems.
And an online presence isn’t the only LCL experience that Sanjay is looking to change. First, there’s the perception of some larger customers.
“Some of them don’t fully appreciate the benefits of LCL. If they were to look more in-depth, they’ll see the opportunity for savings in their supply chain. Are they fully utilizing their containers? Do they really need fast transit times?”
Not to mention some entrenched attitudes within the industry.
“People in our industry have to embrace change much more and much faster than before. There are too many outdated practices. As one example, let’s use sales. In other industries, you generally first discuss what the customer wants, and that leads to a price. But in our industry, it’s typically the other way around. Find out what other offers they have and then match or undercut the price. There’s not enough discussion on what the customer needs or wants in terms of solutions or service levels.”
That ties in with other recent Freightos research, which found customers are increasingly looking at service, rather than price, when selecting a new forwarder.
Poised For The Challenge?
But, as tough as all of these challenges may be, Sanjay is confident he’s sitting in the best place.
“The large forwarders are holding most of the cards – customers, cargo and data. Those of us who move the fastest and can deliver their customers a great online experience will find success.