Digital freight forwarders are freight forwarders who have undergone digital transformation, which has become one of the most discussed topics in the business world.
The unstoppable digital trend has driven countless industries, including the freight forwarding industry, into investing heavily in digitalization. Unfortunately, few succeeded. Without well-planned strategies, digital transformation can be the reason for the closure of businesses, especially during tough times (Learn how to work from home as a freight forwarder).
In this blog post, we will be discussing what digital transformation is, why it is imperative for freight forwarders and NVOCCs (learn how to apply for NVOCC license here), and what you should pay attention to.
What is Digital Transformation?
Digital transformation can be generally defined as the process of integrating digital tools or technologies into all departments and areas of business. An example of digital transformation is Chatbot.
In the past, humans are the ones answering customers’ questions through Facebook chat or on the companies’ websites. Nowadays, ChatBots can be programmed to answer the questions and even place orders for customers. A freight forwarding example will be freight forwarders incorporating digital tools to provide instant quotes or real-time tracking information for their clients. By incorporating these tools, businesses can create new business models, processes, culture, services, and products to elevate themselves in the competition.
Do I have to become a digital freight forwarder?
Yes, freight forwarders must embrace the trend to step up their games. As a matter of fact, failure to become digital freight forwarders can eventually lead to being eliminated from the competition.
All kinds of enterprises undergo digital transformation to level up their products and services. As consumers, the clients of freight forwarders can order a product on Amazon and it will probably be delivered to their houses quite soon. By going to sites like Agoda and Airbnb, they have access to countless hotels for comparisons. Their expectations in the B2C sector will eventually influence their expectations in the B2B sector. They will eventually begin to expect faster freight quotations, better freight visibility, and more efficient services.
Aside from that, digitalization has allowed businesses to streamline their processes and improve productivity. For example, by switching from using phones or fax machines to messaging apps or emails to connect with their clients, digital freight forwarders can respond to their clients much faster. Furthermore, digitizing all documents instead of writing all information on pieces of paper also speeds up the documentation process.
Failure to integrate digital tools and become digital freight forwarders can truly put freight forwarders out of business.
Why do businesses fail to digitalize? What to avoid to become a digital freight forwarder?
Even though countless businesses have started digitalization, a good number of them have encountered obstacles and only a few of them manage to achieve the goal. Some common reasons are:
- Internal Resistance Humans are creatures of habit. Introducing changes to companies often lead to internal resistance. Employees or managers might say “If it ain’t broke, don’t fix it” or “Why? The old methods worked quite well.” Changes are considered frightening and it is understandable that a lot of people will just stick to their original plans, which were proven to be effective in the past.
- Inefficient collaboration between departments Collaborations between different departments within a company has never been easy. Each department has its own set of objectives and there might be conflicts of interest between different departments. Furthermore, inefficient interdepartmental communications during the process of transformation can be quite damaging to the company.
- Lack of cybersecurity In the past, enterprises mainly focused on internal IT security as it was rarely connected to external sources. However, digital transformation, with technologies such as cloud, AI, and IoT applications, connects internal information with external platforms and also integrate cross-departmental information. Thus, it becomes paramount for enterprises to establish defense infrastructure and mechanisms to provide information security capable of protecting information from external threats with which enterprises did not have to deal in traditional business settings.
- Neglected Opportunity New threats come with new opportunities, one of which is cooperation with startups. Enterprises might miss the opportunities of including startups into their digital transformation plan. Working with startups to achieve digital transformation certainly benefit enterprises in a few ways. Firstly, startups are moving at a faster pace and are more flexible compared to enterprises. They are capable of constantly trying new technologies, products, and services without going through a lengthy process often required in enterprises. Secondly, it is definitely riskier and costlier for enterprises to digitally transform their business models by themselves than form partnerships with startups to achieve the goal. Lastly, working with startups and experiencing different business cultures may help enterprises create opportunities that might not be possible if they work alone.
The freight forwarding industry has been considered the most traditional industry of all. However, this traditional industry has inevitably jumped on the digital trend. To survive in the digital age, forwarders must get out of their comfort zone and become digital freight forwarders. There are definitely other factors that might hinder the transformation process. Nevertheless, taking all the aforementioned factors into account, making contingency plans, and having clear planning and well-thought-out strategies will definitely increase the chance of success.