Those in the freight forwarding business most likely are looking at what is happening with the shipping lines (Maersk, CMA CGM, and others). Please see an excellent article here to understand what’s happening. Moreover, it’s happening in other logistics businesses because now every company is trying to develop new offerings or looking for ways to differentiate from the competition to be seen as the number one option for their customers. It’s mainly happening because of the changing shippers’ need’s that prefer to get more services from one hand, also because of increased e-commerce channel importance, the emergence of new types of digital logistics businesses, and strengthening positions of some big integrators (DSV)
As predicted in 2020, container lines will strengthen their positions by adding more legs. Some moves were seen in 2021, and we will see more in 2022.
Why is this happening?
Container lines have a big bag of money (combined profit was 200 billion in 2021), which must be invested somewhere. However, as investments into fleet extension would limit their future earnings, the only reasonable option is to invest in other services and means of transportation. Likewise, other logistics businesses are improving their offering and working on custoemr journey and customer service improvements or looking for ways to make their services and operations digital.
So should the freight forwarders start to worry?
Not an easy answer, as no one knows for sure.
I believe that those freight forwarders who will invest in fast business development, boost their customer services, create more value-added services for their customers, ensure digitization processes, and work out their employer’s branding and marketing will be okay.
Others that will stick to the paper-moving business, sitting in the same place waiting for what’s going to happen, can get themselves into trouble in the long run. Because other players are not waiting, we have seen similar situations in other industries already, and we will see shifts in the Logistic’s industry.
And when I’m talking about growth and service level improvement, and other things, I do non-talk about some minor improvements but about an immense leap forward. For example, suppose you are growing at a 5-10 % pace; it’s not enough for today’s turbulent times. And if you declare a 200% growth, show me a clear action plan. If you declare that you provide excellent customer service, please show me how you measure it. If you declare that you have best in class services, answer me: How are you better than your competition? Otherwise, it’s just bla… bla… bla…
The upcoming 5 years will be critical for the logistic industry, as we believe that new leaders and losers will emerge within this period. It is also related to new players’ emerging (or strengthening). For example, Amazon is widening its logistics offer, and Walmart and other retailers are building their own logistics operations. As a result, everyone will take its market share.
Upcoming years will be full of challenges. Logistics businesses need to prepare for that.
And if you do not have a clear understanding of where to start, please write an email to us: info@scsbureau.com.
Together with us, you can grow faster.
About the author:
Tomas Ananjevas is a supply chain professional with 15 years of experience purchasing and selling Logistic’s services and building a supply chain from scratch. He founded a consulting, training, and staffing company that works exclusively with the logistics industry. Tomas is currently helping logistics companies implement the necessary changes that ensure business growth and continuity. You can arrange a time to talk with tomas by clicking here.
