Digitalization, while important, is not a silver bullet for freight forwarders. Businesses still need to blend digital advancements with traditional methods to keep ahead in an ever-changing industry.
Flexport’s recent struggles – where approximately 20% of its global workforce suffered layoffs – serves as a warning and restarted the debate around why going “fully digital” is such a sensitive topic at the moment.
Is digitalization enough?
On a recent episode of The Loadstar Podcast, Xeneta chief analyst Peter Sand says relying solely on a digital platform is not a viable business model, especially for digital freight forwarders who didn’t build a sustainable case during the COVID-19 pandemic.
“You cannot build a successful business one way or another on a digital platform only,” he says. “Those that failed to build sustainable businesses during the COVID heydays will find it more difficult to find their ground going forward, in a much-changed market.”
The human touch
Sand says even though “digitalization is all around us,” shipping is still a “personal thing.”
Customers and business associates want “a face to talk to and a person to hold reliable.” He also calls into question the huge investment traditional forwarders like Kuehne+Nagel have made towards the digitalization of their platforms.
Building and maintaining strong relationships with customers and stakeholders are vital to any business, ensuring a level of satisfaction and trust that is hard to achieve with digital interaction alone.
Ever-changing market dynamics
While digitization is important, the freight and logistics industry is subject to a myriad of constantly-evolving variables. Escalating fuel costs, regulatory changes, economic fluctuations all require a hands-on approach.
While AI and technology can analyze data and offer solutions in real-time, the real-world insights and experiences from experts and industry leaders shouldn’t take the backseat to a set of digital tools.
A balanced approach, where decision-making relies on a combination of the ‘human touch’ and tech tools, will create a robust strategy to survive market volatility.
Talent and training
While digital platforms can multitask better than humans, having a well-trained, knowledgeable workforce still goes a long way.
Companies should be investing in training and development programs to ensure their staff understand digital tools while staying up to date with regulations and industry standards. This combination drives business forward in ways that digitalization alone cannot.
The move towards digitalization is inevitable and the transition might not always be smooth. However, having a balanced and well-thought-out strategy that integrates digital innovations with the human element is the key to staying afloat in a competitive arena.
About the author
Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.
