73% of Freight Procurement Teams Still Rely on Manual Processes: Here’s What It’s Costing Them

Q4 2024 Procurement Insights for Smarter Freight Strategies

Global freight shipping is transforming rapidly, and procurement professionals are at the forefront of this evolution. But what’s really working in freight procurement today?

Key insights from our latest research:

• Procurement teams struggle with efficiency – Half of organizations rate their procurement as only somewhat effective or worse.
• Digital transformation is lagging – 73% of teams still rely on spreadsheets and disconnected systems.
• External factors create major disruptions – Cost volatility, geopolitical instability, and capacity constraints remain top challenges.
• Integration & sustainability are essential – Many procurement teams need better integration tools and CO₂ tracking for compliance and efficiency.

Inflation, geopolitical disruptions, capacity constraints, and sustainability mandates are converging to create operational complexity. For freight procurement teams, outdated systems and fragmented processes compound these pressures.

However, emerging technologies, data-driven strategies, and industry best practices offer a roadmap to overcome these hurdles. This article leverages insights from SHIPSTA by Freightos’ latest survey, combined with expert analysis from key thought leaders in the logistics industry, to explore actionable ways to reduce costs, improve efficiency, and future-proof freight procurement operations.

A recent survey of over 70 shippers throughout Europe reveals fascinating insights about how digitalization is reshaping the industry.

What’s Keeping Procurement Leaders Up at Night?

Procurement professionals identify several external and internal challenges that hinder their ability to optimize freight operations. According to SHIPSTA by Freightos’ research, the top concerns include:

1. Cost Pressures: 55% of respondents said rising costs remain their biggest challenge. Fuel price volatility, inflation, and geopolitical instability are driving transportation rates higher than ever.
2. Geopolitical Disruptions: 45% cited global instability as a significant obstacle to efficient freight procurement.
3. Capacity Constraints: 38% of respondents struggle to secure adequate freight capacity, especially during peak periods or when market disruptions occur.

These pressures are further exacerbated by reliance on outdated tools like spreadsheets and fragmented systems that hinder real-time decision-making.

Industry thought leaders have echoed these findings, emphasizing shippers’ challenges in navigating a volatile market. Lars Jensen, CEO of Vespucci Maritime, has repeatedly highlighted the market’s volatility in his analysis on LinkedIn. He notes that geopolitical disruptions have created unpredictable rate swings, challenging shippers to secure capacity and stabilize costs effectively.

Insight #1: Procurement Teams Could Be More Effective

SHIPSTA by Freightos’ research reveals that 50% of organizations rate their freight procurement efforts as only “somewhat effective” or worse, with 10% admitting significant inefficiencies.

Key pain points include:

• Difficulty negotiating competitive rates.
• Slow response times to market volatility (e.g., rate changes or capacity shifts).
• Limited cost management visibility.
• Lack of integration with environmental sustainability initiatives.

Why does this matter? Inefficient procurement processes don’t just increase costs—they can also delay shipments, reduce customer satisfaction, and erode competitive advantage.

Industry experts have similarly highlighted these concerns. Brian Glick of Chain.io notes that procurement teams often lack access to flexible digital tools that integrate seamlessly with legacy systems. He emphasizes that shippers can reduce inefficiencies by adopting platforms capable of managing fragmented workflows.

Insight #2: Digital Transformation is Key to Unlocking Efficiency

Digital transformation remains a critical differentiator for logistics operations; however, many procurement processes are still far from modernized. SHIPSTA by Freightos’ survey found that 73% of respondents are not fully digitized, meaning they rely on spreadsheets or fragmented systems to manage freight.

Here’s the breakdown:

• 27% use advanced software and are highly digitized.
• 45% are somewhat digitized but still rely on manual work across inputs.
• 28% are minimally digitized or not digitized at all.

In recent interviews, Eric Rempel of Redwood Logistics has noted that digital transformation is no longer optional. He has highlighted that the COVID-19 pandemic accelerated the need for digitalization, making it a critical component of modern supply chain strategies.

Industry studies suggest that companies leveraging automation tools can reduce manual errors, enhance efficiency, and achieve significant cost savings—potentially up to 15%—through improved rate management and optimized carrier negotiations.

Insight #3: External Factors are the Biggest Threats

As we stated earlier, according to SHIPSTA by Freightos’ findings, the top external challenges for freight procurement include:

1. Cost Volatility: Driven by inflation and fluctuating fuel prices.
2. Geopolitical Disruptions: Trade restrictions and conflicts destabilize supply chains.
3. Capacity Shortages: Particularly during seasonal peaks or unexpected demand surges.

Industry leaders agree that digital transformation is no longer optional. Jason Miller of Michigan State University, who has analyzed macroeconomic factors like inflation, suggests that shippers adopt predictive analytics tools to better forecast demand and navigate capacity constraints, reinforcing the need for more advanced procurement technology.

Experts in the logistics space also stress the importance of proactive measures to mitigate these risks. Soren Toft, CEO of MSC, underscores the need for strong collaboration between carriers and shippers to navigate capacity shortages. MSC has been investing heavily in digital platforms to improve customer visibility and reliability, demonstrating how technology can play a crucial role in tackling procurement challenges.

Insight #4: Integration and Sustainability are Game-Changers

More than half of SHIPSTA by Freightos’ survey respondents said their digital procurement processes would be significantly improved with tools that integrate with legacy systems. Additionally:

• 37% wanted better data aggregation capabilities (e.g., real-time shipment visibility).
• 36% sought tools for CO2 emissions tracking and sustainability reporting.

Andre Simha, Chief Digital & Information Officer at MSC, highlights that integrating CO₂ tracking features into procurement platforms is becoming a critical requirement for regulatory compliance and ESG reporting.

Sea-Intelligence highlights that companies that incorporate sustainability into their strategies are seeing a 10-15% reduction in carbon emissions while improving operational efficiency.

Actionable Recommendations for Procurement Professionals

1. Centralize Data and Streamline Processes

• Use centralized freight procurement platforms to consolidate shipment data, automate manual tasks, and enable real-time visibility.
• Tools like SHIPSTA by Freightos provide smart rate calculators and predictive analytics tailored for shippers.

2. Focus on Cost Visibility

• Leverage advanced analytics tools to identify cost-saving opportunities across your supply chain.
• Dynamic negotiation features allow you to lock in competitive rates even during market fluctuations.

3. Invest in Technology that Integrates Seamlessly

• Choose solutions designed to integrate with your existing ERP, TMS, or WMS platforms. This minimizes disruption during implementation while maximizing ROI.
• Freightos’ API integrations provide seamless connectivity between your systems and its marketplace.

4. Prioritize Sustainability Goals

• Incorporate CO2 emissions tracking into your procurement process using frameworks like the GLEC or EcoTransIT World tools.
• Meeting sustainability goals enhances brand reputation while ensuring compliance with emerging green shipping regulations.

Get Ready for What’s Next

The logistics landscape is evolving rapidly due to new technologies, shifting geopolitical forces, and heightened customer expectations for sustainability. Procurement professionals who adopt modern platforms today will be better prepared for tomorrow’s challenges.

Digitally mature organizations are better positioned to navigate the complexities of modern supply chains. Harnessing data-driven insights and cutting-edge features via SHIPSTA by Freightos, procurement teams can unlock new levels of efficiency, cost savings, and sustainability in their operations. 

Book your demo today to see how SHIPSTA by Freightos can transform your freight procurement strategy.