Chapter 1.2 – Ports and Maritime Supply Chains

Author: Dr. Theo Notteboom

Seaports are functioning as platforms within global supply chains and global production networks. These supply chains are highly dynamic as they react to changes in global trade patterns, consumer preferences, and advances in supply chain management and information technology.

1. Growing Complexity in Supply Chain Management

Supply Chain Management (SCM) is the coordination and management of a complex network of activities delivering a finished product to end-users or customers. The process includes sourcing raw materials and parts, manufacturing and assembling products, storage, order entry and tracking, distribution through the various channels, and finally delivery to the customer.

Ports are a nexus in supply chains as they support the interaction between global supply chains and regional production and consumption markets. Global supply chains have become complex, pressuring the logistics industry to simultaneously improve their costs, performance, and resilience to disruptions. Logistics services that still offer value may experience a debasement and become basic services, only generating a small margin. This is especially the case for physical added value.

Within supply chains, corporations interact with external suppliers, internal departments, external distributors, and customers. The successful management of a supply chain is influenced by customer expectations, globalization, technological innovations, government regulation, competition, and sustainability concerns.

A. Customer expectations

SCM models evolve continuously due to influences and factors such as globalization and expansion into new markets, mass customization in response to product and market segmentation, lean manufacturing practices, and associated shifts in costs. Service expectations of customers are moving towards a push for higher flexibility, reliability, and precision. In many industries, product innovation has become a significant competitive factor. This has led companies to compete to be the first to launch new products and technologies. As a result, average product life cycles and supply chain cycles such as lead time have decreased. These expectations can be assessed through a series of indicators, such as the Logistics Performance Index developed by the World Bank.

The number of products to be shipped and the shipment frequency increase, whereas batch sizes are becoming smaller. There is a growing demand from the customer for make-to-order or customized products, delivered at maximum speed, with high delivery reliability, at the lowest possible cost. While costs remain an important factor in customer satisfaction, factors related to reliability are becoming central. The focus is on supply chain excellence and efficient customer service.

A growing skills shortage is a distinct possibility in the logistics industry as the labor force is challenged to provide an increasing array of complex and diverse services. Logistics companies are trying to recruit sufficient talent to maintain the labor force and provide ongoing training to improve their productivity. Considering the digitalization of all parts of society, including logistics, the requirement for new skill sets will further intensify this shortage. Besides, the targeted labor force might be attracted by other, more high-profile sectors. The port and logistics sectors have difficulties competing for talent.

B. Globalization

One of the main basic driving forces of change in the port industry emerges from globalization and the structural shift from supply-driven to demand-driven economies. The supply-driven economy was based on economies of scale in production, standardization, and mass consumption of standard products. This approach was scrutinized as productivity increases linked to economies of scale met their structural boundaries and as a growing individualism began to have an impact on consumption patterns. The outcome was a shift to a more demand-driven economic system, combined with global production networks on the supply side of the markets.

Multinational enterprises (MNE) are the key drivers of globalization. A shift has taken place from capital-intensive activities – such as ownership and management of a large number of manufacturing sites, distribution centers, and sales outlets – towards another type of activity, which is far less capital intensive and focuses more on developing a strong brand. Branding forms a key concept in the new business model of MNEs. This involves a strong focus on customers and product innovation, whereas production is outsourced to a network of suppliers. MNEs increasingly develop long-term relationships with a limited number of logistics suppliers based on co-makership. As such, a large number of MNEs have adopted flexible multi-firm organization structures on a global scale.

Many of the world’s largest MNEs manage extensive networks of globally dispersed inputs. Global sourcing, as such, is a major driver of world trade. However, at the customer end of the value chain, very few of the world’s largest multinational enterprises operate globally, in the sense of having a broad and deep penetration in foreign markets across the world. Instead, they are regionally based on breadth and depth of market coverage, with most of their sales situated within their home leg of the ‘triad’, namely in North America, the European Union, or Asia. The broad geographic distribution of sourcing and production (back end) versus less broad geographic distribution of sales (customer end) is reflected in trade patterns, supply chain management needs, and shipping requirements.

C. Technological innovation

The streamlining of supply chains through customization and standardization using advances in data analytics and visibility leads to concepts such as “plug-and-play supply chains”. These are finely-tuned, agile supply chains consisting of core standardized, easily replicable solutions, augmented by standardized, proven processes tailored to unique segment or market needs. These supply chains need to be supported by digitalization involving intelligent, data-driven decision support systems around customers, markets, and profitability.

The focus will be on more local and sustainable supply networks in which clean forms of transport will meet shippers’ expectations regarding cost and efficiency performance indicators. Goods will have to be transported economically, with limited environmental impacts, and in a sustainable manner. To this extent, shippers will expect an orchestration function from service providers in which operational excellence is supported by obtaining a greater convergence between physical and data processes.

Postponed and additive manufacturing (3D printing) will challenge existing business models. This trend will affect transport and logistics demands. More manufacturing is likely to be regional, be it in local factories, independent manufacturing farms, or even with a new role for logistics service providers that will offer production services and integrate them with their transport, storage, and distribution services.

D. Regulation and competition

Changing comparative advantages in economies like China, where costs and inflation keep rising, and with their “China plus one” scenario in which China will transition from an export producing towards a consumption-driven economy, have a major impact on the complexity and challenges of current supply chains. Combined with manufacturing risks, such as time to market or responsiveness, import duties, the availability of skilled labor force, synergies with ecosystems, the cost of energy, and automation, this means that more sub-assembly and manufacturing will relocate to other regions.

More horizontal collaboration between transport companies and logistics service providers will be needed to deal with the need for shorter, more sustainable, and cost-efficient supply chains. This will entail its own complexities, mainly where it concerns mutual trust concerning data-sharing protocols and protection of one’s competitiveness.

Consolidation in the logistics sector will result in a smaller number of companies that will empower the supply chain to support increasingly efficient ICT systems. The data component will leverage performant and pro-active service providers to transform into companies with a new outlook on logistics services. Next to an increasing number of traditional activities being outsourced, such as transport, warehousing, and various types of value-added services, the presence of collaboration platforms will capacitate certain service providers to develop new types of logistics services.

The security of supply will become increasingly important. The resilience of the supply chain is becoming a crucial element in dealing with ever more present supply chain disruptions due to local political instability, natural disasters, acts of terrorism, etc. Supply chains will need to have redundancy built-in. Supply chains will be designed for resilience. This will result in increased supply chain visibility and data sharing between supply chain stakeholders.

E. Sustainability

The systematic use of greener alternatives for logistics needs to be developed as environmental pressures from society increase, including through more stringent regulations and consumer behavior changes. This impacts the way ports operate and how they are linked, which is associated with a re-engineering of supply chains in favor of modal shift and synchromodality. This results in the development of sustainable hubs and corridors along which new supply chain networks need to be developed. Corporations are adapting their business models to include sustainability criteria in their procurement and operations, which impacts the related supply chains through the setting up of Green Supply Chain Management strategies.

Green Supply Chain Management (GSCM) is a business model that integrates environmental concerns into the inter-organizational practices of SCM.

GSCM has gained increased attention within the industry as there is a growing need for integrating environmentally sustainable choices into SCM practices. The growing importance of GSCM goes hand in hand with environmental issues such as climate change, the scarcity of some new-renewable material resources, waste disposal, and increasing pollution levels in developing economies. Adding the “green” component to supply chain management involves addressing SCM influence and relationships to the natural environment.

The main idea behind GSCM is to strive for a reduction in environmental impacts by focusing on a series of supply chain strategies known as the five ‘Rs’; Reduce, Re-use, Recycle, Remanufacture, and Reverse logistics. The fields of action in GSCM include product design, process design and engineering, procurement and purchasing, production, energy use and mix, and logistics (distribution and transportation).

An important part of the success of the circular economy hinges on the way logistics will enable the transparency needed to set up efficient and integrated fully circular supply chain networks. Next to the physical aspect of integrating supply chain flows to maximize circular economy opportunities, end-to-end integration of supply chain processes will be crucial. Thus, the circular economy offers new opportunities for shipping and logistics service providers and challenges them to collaborate with industry stakeholders.

2. Improving Competitiveness

A. Operating margins and cost control

The developments in supply chain management are taking place in a logistics market usually characterized by low margins. It can be characterized as a buyers’ market, giving shippers and cargo owners an advantage over the sellers of logistical services in price negotiations. The logistics tendering practices of (large) shippers add to the pressure on operating margins. The buyer’s market stems from the law of supply and demand where downward pressure on prices is associated with supply increases amid a constant demand. The competition in the marketplace exists between sellers (i.e. the logistics service providers), who often must engage in a price war to entice buyers (i.e. shippers) to use their services. The resulting low margins force market players such as logistics service providers, terminal operators, shipping lines, and land transport operators to focus on cost control without yielding efficient performance and timely delivery.

Although logistics costs differ between corporations, they generally include transportation, labor, storage/inventory, and administrative costs. Logistics costs largely depend on the nature of the goods. The possibility to achieve a lower cost base can be negatively affected by a broad range of factors such as the volatility of resource and fuel costs and delays caused by complex regulations governing international trade, weather circumstances, or technical problems. In general terms, cost control entails specific actions over a variety of operational fields:

  • Optimized use of resources. The underuse of key assets, such as conveyances (ships, vehicles) or warehousing facilities, directly affects the cost base and operating margins. By optimizing assets utilization market players can improve their business efficiency. Efficient asset management also includes a focus on preventative maintenance.
  • An increase in fleet size and service network size to benefit from economies of scale and scope (see container shipping market).
  • Consolidated shipments and cargo bundling to reduce the cost per unit transported.
  • Using a single integrated platform, accessible to involved parties to avoid time-consuming and inefficient duplication of activities and processes across operations.
  • Optimize outsourcing vs. vertical integration. In some cases, market players can save costs by outsourcing a portion of their supply chain operations. In other cases, extending the reach of activities through a vertical integration process can bring higher margins. Logistics service providers might use outsourcing to lower their cost base. They manage what they can control best to keep costs down and look for low-cost outsourcing for the remaining. This outsourcing strategy is not without risk as a corporation might outsource activities which it failed to recognize as value-enhancing.
  • Improvement in supply chain visibility can result in more efficient planning and lower operating costs by better managing mobile and fixed logistics assets. Although there is no way to predict or prevent disruptions in the logistics process, proper supply chain visibility provides insight into such issues. Using real-time dashboards that refresh data automatically provides supply chain managers and financial executives with the most current and relevant information.
  • Labor inputs for logistics operations. Labor Management Software systems combined with specific labor-related Key Performance Indicators (KPIs) and incentive-based human resources practices help corporations efficiently manage and motivate personnel.
  • For some corporations, logistics costs can be reduced by automation of assets such as vehicles, warehouse management systems, and yard operations. Regulating, automating, and optimizing manual processes offer opportunities to reduce staff requirements, centralize operations to lower-cost areas, and create a more proactive approach to ensuring customer satisfaction.
  • Collaboration and partnership with suppliers can help reduce costs by allowing partners to focus on their respective comparative advantages over processes and markets. Suppliers can sometimes absorb direct logistics costs.

B. Cost leadership and differentiation strategies

At a more strategic level, logistics companies are challenged to design business models that ensure their competitiveness and growth. In an efficiency-oriented market environment, customers may choose to purchase from one company rather than another because the service price is lower than competitors, or the customer perceives the service to provide better-added value or benefits. However, these are broad generalizations, as efficiency-oriented companies in the logistics, port, and maritime industries aim at achieving competitive advantage by either cost leadership or differentiation. Cost leadership implies that market players try to achieve a competitive advantage by becoming low-cost logistics services providers. A differentiation strategy tries to provide specific services in market niches distinct from those provided by competitors, offering greater value to the client.

A corporation aiming to achieve competitive advantage by reducing prices is likely to be followed by competitors, with the risk of lower margins across the industry and an inability to reinvest to develop services for the long term. Therefore, a low cost or cost leadership strategy requires:

  1. A low-cost base that competitors cannot match.
  2. A market segment in which low price is important. Sustaining a low price advantage is challenging and cost leadership is very difficult to achieve.

Cost advantages typically emanate from specific competencies driving down costs throughout the value chain, such as economies of scale and scope, market power, buying power, and gaining from operational experience (curve effects). It may be possible to substantially reduce operational costs by outsourcing provision or by a careful examination of missing capabilities and competencies in parts of the value chain. A large part of the logistics industry traditionally thrived on low-cost strategies. Conventional transport operators function as the last segments in outsourcing, delivering basic services (i.e. trucking) with little room for service differentiation. Margins are low and fierce competition combined with the high customer bargaining power prevents these operators from increasing their revenue base.

Differentiation strategies aim to achieve a higher market share than competitors (which yield cost benefits) by offering better products or services at the same price or enhanced margins by pricing slightly higher. Differentiation comes in many forms:

  1. Uniqueness or improvements in services through R&D or building on the innovative capabilities of the company.
  2. Marketing-based approaches to underline value to the customer of services.
  3. Competency-based approaches in which the company tries to build differentiation based on its competencies that are difficult for competitors to imitate.

If the aim is sustainable differentiation, there is little point striving to be different if others can imitate quickly. The most important resources and capabilities for a company are durable, difficult to identify and understand, imperfectly transferable, and not easy to replicate. Resources for which a corporation possesses clear ownership and control (e.g. patents) are among the most valuable differentiation factors.

Companies in the logistics industry can build sustainable competitive advantage by leveraging their core competencies. The prime resources of the company consist of physical assets such as equipment and locations, human resources such as the workforce, management team, experience and training, and organizational resources associated with the corporate culture. These need to be transformed into capabilities, often through the diffusion of corporate knowledge across offices. In time, new core competencies emerge, representing the fundamental strengths of the corporation.

While following a differentiation strategy, high margins might be achieved by offering tailor-made and highly complex services. However, this requires the corporation to understand what is valued by customers and to have a better sense and response to customer needs. As customer needs change, a corporation following a differentiation strategy may have to review these strategies continuously. A clear sign of an effective differentiation strategy is the continuity of good profit margins and the difficulty competitors have in keeping up.

A logistics company following a differentiation strategy might create an environment in which the actual or perceived cost for a buyer of changing the source of supply of a service is high. In these circumstances, the customer might depend on the supplier for particular services, or the benefits of switching to another supplier might not be worth the cost or risk. A port or maritime shipping company that offers unique and integrated tailor-made services to its customers has more chances of limiting the footloose behavior of that customer and, as such, increases customer loyalty. If a company succeeds in becoming an industry standard, other businesses typically have to conform to that standard to remain competitive.

In following a differentiation strategy, corporations have to choose between a broad differentiation strategy across a specific market or a focused strategy. New ventures often start in a very focused market. Maintaining a highly focused strategy might not be feasible in the long run, as customers might not be willing to pay a higher price. Therefore, corporations might opt at a specific moment to lower the price while maintaining differentiating features (i.e. a move towards a ‘normal’ differentiation strategy).

A hybrid approach might be advantageous as an entry strategy in a market with established competitors. The aim is then to acquire a market share and establish a foothold from which to move further. A hybrid strategy often is of a temporary nature as many corporations shift to a follow-through strategy after some time to increase margins.

3. The Role of Third-Party Logistics Services

Innovative corporations are taking a broader view of their business segments they seek to control and manage. As the ambition of global corporations often exceeds their capability and resources, outsourcing of logistics functions can be an important strategic option. Outsourcing enables a producer to transform fixed costs into variable costs, freeing internal resources for investments in core activities. Four basic forms of outsourcing can be distinguished concerning supply chain management:

  • The outsourcing of the production of components. Large production units are replaced by a network of suppliers organized on a global or local scale (global sourcing and local sourcing). Global corporations increasingly develop long-term relationships with a limited number of suppliers on the basis of mutual trust (co-makership).
  • The outsourcing of Value-Added Logistics (VAL). VAL implies that the production and distribution parts of a supply chain become truly integrated into one. For example, production companies in the high-tech industry increasingly outsource logistics manipulations to their products towards the distribution centers located near the consumer markets. As such, a large part of the value creation in the supply chain is transferred to logistics service providers. VAL might even include secondary manufacturing activities like systems assembly, testing, and software installation.
  • The outsourcing of transportation, warehousing, and distribution. Third-party transportation is already widespread, but warehousing and distribution activities have also become key outsourcing businesses. The observed outsourcing trend encourages logistics service providers to engage in supply chain management.
  • The re-engineering of supply chain processes (including customer order management, procurement, production planning, and distribution) to enhance performance typically results in collaborative networks with logistics partners.

Increasing customer demands drive the 3PL service industry (Third Party Logistics) forward.

A 3PL is an asset-based company that offers logistics and supply chain management services to its customers (manufacturers and retailers). It commonly owns assets such as distribution centers and transport modes.

The need for a wider array of global services and integrated services and capabilities (design, build and operate) triggered a shift from transportation-based 3PLs to warehousing and distribution providers. At the same time, this trend opened the market to innovative forms of non-asset-based logistics service providers, leading to the development of 4PL (Fourth Party Logistics).

A 4PL is a supply chain integrator that assembles and manages the resources, capabilities, and technology of its organization with complementary service providers to deliver a comprehensive supply chain solution. The competence of 4PLs lies in selecting, linking, and bundling service providers and aligning all concerned stakeholders in the supply chain.

Whereas a 3PL service provider typically invests in warehouses and transport assets, a 4PL service provider restricts its scope to IT-based supply chain design. Consultants and IT firms help 3PLs and 4PLs expand into new markets and to become full-service logistics providers. Notwithstanding the emergence of non-asset-based 4PLs, the role of 3PLs in logistics markets remains strong. Hence, asset-based full-service providers increasingly develop their own IT control systems. Moreover, many logistics users prefer to keep control of the design of the supply chain in-house instead of being dependent on 4PLs, mainly for the purpose of maintaining their added value.

4. Functional Integration in the Logistics Industry

The logistics industry is subject to integration forms, aiming to improve its scale, scope, and market reach. Functional integration involves horizontal consolidation and vertical integration strategies creating a logistics market consisting of a wide variety of service providers ranging from megacarriers to local niche operators. Not only does the geographic coverage of the players differ (from global to local), but major differences can also be observed in focus (generalist versus specialist), the service offering (from single service to one-stop-shop), and asset-orientation (asset-based versus non-asset-based).

A. Vertical integration

Globalization and outsourcing open new windows of opportunities for shipping lines, forwarders, terminal operators, and other logistics service providers and transport operators. Manufacturers are looking for global logistics packages rather than just shipping or forwarding. Global logistics is the dominant paradigm where most transport chains have responded by providing new value-added services in an integrated package through a vertical integration along supply chains.

The level of vertical integration has increased in the past decades. In a conventional situation, the majority of logistics activities were performed by different entities ranging from maritime shipping lines, shipping and customs agents, freight forwarders, and rail and trucking companies. Regulations often prevented multimodal ownership, leaving the system fragmented. With an increasing level of functional integration, many intermediate steps in the transport chain have been removed. Mergers and acquisitions among companies performing specific functions in the supply chains have permitted the emergence of large logistics operators that control many segments of the supply chain. The term megacarrier refers to a highly integrated logistics service provider, such as a 3PL or 4PL. These corporations can, in principle, meet the requirements of many shippers to have a single contact point on a regional or even global level, known as a one-stop-shop.

Technology has also played an important role in this process, namely in IT (control of the process), intermodal integration, and synchromodality (control of the flows). Vertical integration increases competition between corporations with different core businesses. For example, a railway company getting involved in global logistics (e.g. DB Schenker) becomes a competitor of established logistics service providers. A shipping line entering the terminal operator business engages in a competitive relationship with independent terminal operators unless some form of partnership is formed. As such, vertical integration leads to overlaps in the activity portfolio of corporations, particularly when they share the ambition to become ‘one-stop shops’ in global logistics. While vertical integration serves as a business model in the logistics and transport market, external economic shocks and poor market conditions can swing the pendulum towards de-integration. For example, the financial-economic crisis of 2008-2009 forced several corporations to reassess their vertical integration strategies in order to secure enough liquidity for their core activities. In some cases, this led to divestment and a re-focus on core activities.

B. Horizontal integration

Mergers and acquisitions (M&A) shape the contemporary business environment, not only between different types of corporations (vertical integration) but also between corporations involved in the same type of activity or core business (horizontal integration). Several waves of horizontal integration activity have resulted in a high market consolidation level in the logistics industry. Many of the top 3PL companies were involved in large-scale M&A activities.

M&A activity is not only driven by corporations searching for take-over candidates and the necessity to improve competitiveness and long-term survival. In addition, corporations that have decided to divest aspects of their portfolio are, as a consequence, looking for buyers. The logistics challenges emerging from mergers and acquisitions include the proliferation of customer service policies to multiple, overlapping distribution networks and infrastructure overcapacity.

C. E-fulfilment and E-commerce

The rise of 4PLs and related online players triggered a whole range of e-market business models with proper functionalities, often with mixed success. Acquiring critical mass seems to be the main obstacle. The e-business environment creates new distribution requirements in terms of e-fulfillment. The growth of e-fulfillment and e-commerce affected B2B (business to business) activity and boosted the online transactions at the levels of B2C (business-to-consumer), C2B, and C2C. E-commerce increasingly shapes how people shop for goods. It has become an important tool for small and large businesses worldwide, not only to sell to customers but also to engage them with efficient delivery services. Information system quality, service quality, and users’ satisfaction are key in this respect. E-commerce offers more opportunities to reach out to customers worldwide and cut down unnecessary intermediate links, reducing the cost price. The vast amount of customer-related data allows e-commerce firms to achieve a high degree of personal customization and targeted marketing. Data integrity and (cyber)security are pressing issues for the e-commerce market.

The growth of e-fulfillment and e-commerce activity has large implications for supply chain management practices. Online markets and retailers have new strategies and distribution channels to fill orders and deliver products using specific distribution centers and networks that differ from traditional distribution channels and systems. Small companies usually control their logistic operation because they do not have the ability to hire a third party. Most large corporations hire a fulfillment service that takes care of their logistic requirements. However, in recent years large e-commerce firms, such as Amazon and Alibaba, have developed a keen interest in controlling e-commerce logistics. The volume they command is starting to have notable impacts on port-centric logistics systems.

5. Information Technologies and Digital Transformation

Outsourcing logistics activities in a wide variety of economic sectors has led to a surge in 3PL and the creation of very large logistics groups. Supply chains need to be supported by a wide range of advanced communication tools and robust, reliable, and cost-effective transportation networks to be set up and operated by IT-supported logistics service providers. Competition between logistics service providers is no longer focused only on services to the cargo flows. Advanced services in the management of information flows are key to gaining a competitive advantage. These advanced services are increasingly aimed at offering supply chain visibility to customers in terms of reliability through advanced tracking and tracing, environmental impact measurement (e.g. carbon footprint calculator), security risks, and related event management. In particular, modern IT systems are geared towards improving channel visibility in three core areas:

  • Improved product flow visibility is achieved through real-time information presented based on user needs with the ability to re-plan and re-direct product flows.
  • Event management forecasts events, has real-time information on actual events, and generates proactive notifications of failures.
  • Performance management is supported by quantitative carrier and asset performance data, performance accountability, and continuous performance improvement opportunities.

Supply chains are evolving towards an open global logistic system founded on physical, digital, and operational interconnectivity through encapsulation, interfaces, and protocol design. It aims to move, store, realize, supply, and use physical objects throughout the world in an economically, environmentally, socially efficient, and sustainable manner. It will require the standardization of internationally recognized consignment codes to communicate throughout the physical reality of the chain. The various transport systems and IT platforms are beginning to integrate horizontally and vertically to become an open IT infrastructure for the logistics sector. In other words, the globally independently developed logistics networks will have to be connected, enabling shippers to have an overall view.

The streamlining of supply chains and the advances in data analytics put increasing pressures on traditional freight forwarders. New technology can place freight forwarders at the risk of obsolescence as forwarding can rapidly go digital in its transactional form, with online sales, instant orders, and automated processes. This is particularly the case for the spot business and basic port-to-port transport, which are entry points for e-forwarding. At the same time, shippers get better information using Big Data solutions and e-marketplaces. This will result in higher rate transparency and better visibility of liner service schedules, shipment service attributes, overall performances, and equipment availability.

Intermediary forwarding agents are the most at risk from new technology providers or business models unless they adapt, such as in offering supply chain visibility. Differentiation and cost optimization can be achieved through improved online customer experience and automation. Major freight forwarders and third-party logistics providers thus have the responsibility to develop innovative new booking and logistics platforms in order to mitigate potential threats coming from within or outside the logistics sector. New technology-driven companies, particularly those within the e-commerce space, are likely to enter or have already entered the transport and logistics arena, giving them a competitive edge or a chance to see a competitive opportunity to bring new models to the market.

Forwarders are challenged to opt for collaborative technology-driven networks, and freight forwarders need to recruit new talent outside of the logistics sector, including from IT-driven potential disruptors. Integrating new business approaches and models in the relatively conservative freight forwarding businesses requires new perspectives.

The small and mid-size shipper, spot shipment, and LCL (less than container load) segment will move online extensively through web-based forwarding services (from instant quote and booking, up to payment) as well as online sales platforms that dynamically push public and customer-specific rates. These platforms may only target and penetrate specific markets where a certain degree of automation can be achieved. Customer profiling and market segmentation will be at the core of the business model of these online sales channels. Large shippers will have access to more procurement options, benchmarking, and insight capabilities. Large exporters and importers will continue to tender their sea-freight (port-to-port or port-to-rail ramp) and land transport, directly with their core carriers and with their forwarders for some part of their volumes. This practice will be available to many at a lower transactional cost with more flexibility using tailored e-tools. E-forwarding and spot procurement will complement traditional contract-based procurement channels.

Related Topics


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