Will the transport brokerage business be disrupted by technological platforms? Two easy strategies, which will strengthen the positions of expedition companies

We have a lot of new technologies (some of them are still in the process of development), which intend to disrupt the business as we know it today. Most of the tech visionaries think, that technologies will disrupt companies which are operating in the supply chain. And in opposite leaders of supply chain companies, say that this will not happen. And what about the real thing? I think no one has a clear answer, as for the companies which operate in the supply chain business trust and individual approach to services is very important, that’s why this should serve as a block for technological platforms, nevertheless I’m sure that techno business will try to acquire they’re cut of the market pie. With this article, I would like to talk about the perspectives of the expedition companies (transport agents, transport brokers) has this business a cure for technological competition.

Why companies prefer to do business with expeditors? 

In order to better understand this type of business, we need to identify why companies work with expeditors:

  • Because they have a wider list of haulers in they’re hand

  • Because they have more experience working in a particular type of business, they perform consulting function

  • They provide an extra filter in detecting poor quality services

  • Because they have market knowledge, now the depth of supply and demand 

  • Because of the technologies which increases visibility and improves the quality of services 

  • Because of other psychological conditions of humankind, which let’s feel safer when the work is done by another side.

Of course, there are more reasons why companies do business with expeditors, but I think those are the main ones which create the additional value for the customer.

Which processes can be replaced by technologies?

We can say that companies perform business with expeditors, because of: Network, Experience, Risk reduction, Market knowledge, Psychological attributes, and additional functionality. In my opinion, technologies can easy replace:

  • Network. Technologies can easily acquire, analyze, filter and connect huge amounts of information. Technologies can do this more efficient than a transport agent with the help of telephone and internet.

  • Market knowledge. Technologies can acquire bunches of information and are able to sort, analyze, filter it in a fast and efficient way, therefore they are able to have better knowledge about supply/demand situation and depth of the market than the ordinary managers do.

  • Additional functionality. Here technologies have unlimited possibilities to increase visibility, predicting ETA, reducing paperwork and etc.

  • Risk Reduction. So far, I’m not so confident to say that technologies can reduce risk, because we still have a lot of human factor factors, and technologies aren’t perfect yet, therefore there is lesser trust in them. However, with each technologies advancement, the risk will be managed better and better

We have two factors left so far, which human hands and minds can perform better than technologies:

  • Experience. I have in mind the deep knowledge about the market, concrete specifics, KPI’s and, the ability to consult client and etc.

  • Psychological attributes. Man first of all are emotional creatures, they like to communicate with humans, they prefer politeness and the feeling that they are listened out and noticeable.

Will the technologies disrupt the business model of expeditors? 

So, if looking through a simple SWOT analyses principle, we can say, that technologies do have a really good chance to disrupt transport agent’s business (4 against 2). The essential question is whether this specialties representative and companies need already change they’re specialty or look for opportunities in another field? In my opinion, this is not necessary to happen, because experience and psychological characteristics are very important factors. Of course, weak market players, who do not create value for their customers and do not have experience which is needed for this business eventually will likely have to withdraw from the market. It can be argued that technologies will carry out a revitalizing function and will help the market to get rid of weaker players.

How to choose the winning strategy in order to win the competitive battle and strengthen business positions? 

I think the strategy is very simple – you need to strengthen positions at which you are better than technological platforms: experience and psychological factors. This can be achieved by transforming your organization into a constant learning one, furthermore, you need to develop an organizational culture which is the best fitting for this goal, and invest into your employee’s knowledge development and improvement. Additionally, you need to leave lesser space for the technology platforms and sharing economy to beat you, therefore you need to invest into technologies which would better increase your service level, visibility, optimize business processes and increases overall business efficiency and are better suited for your clients, than the mass platforms.

In conclusion, I would like to say, that there is always a way out, and a way to win the competitive struggle. In order to succeed all you need is flexibility, agility, and creativity. Do not be afraid to use professional help in this path to help you achieve your goals more efficiently, faster and build a long-term competitive advantage.

Supply chain services bureau can help 3 PL’s to develop new sales and overall strategies, identify your created value for the customer and to teach your team in order to make your company more successful.

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2018-11-22T15:31:11+00:00