Digitalisation does not mean a race to the bottom on pricing

Lars Jensen

Digitalisation will not result in a race to the bottom on pricing for forwarders, according  to SeaIntelligence Consulting founder Lars Jensen.

Speaking at the annual general meeting (AGM) of forwarder association The WACO System, Jensen warned that forwarders need to embrace digitalisation or get left behind.

“Digitalisation is something that should be embraced and that you cannot ignore, if you don’t jump on the train, you’ll end up under it,” he said.

“From my experience in the industry, digitalisation is not what determines profitability, it is the people that do that.”

“There is a general feeling in the freight forwarding market that the transparency that digitalisation brings will lead to a race to the bottom as companies compete to lower their prices,” explained Jensen.

“But research by Sea Intelligence Consulting in 2018 found that 49% of cargo owners did not go for the cheapest offer at the time of booking, meaning there is plenty of space to develop brand and service strength instead of focussing on pricing.”

The expense and technicality of digitalisation are often highlighted as obstacles by freight forwarders, but smaller businesses are more likely to benefit because digitalisation boosts efficiency in targeted, niche areas that freight forwarders normally specialise in.

WACO’s AGM, which this year attracted 115 delegates from 99 countries, provides networking opportunities for members who can take part in bilateral meetings in order to grow business.

“Every year the WACO AGM is an opportunity for our members to gather, discuss, and share ideas on the most important issues in our industry,” said Richard Charles, executive director, The WACO System.

“I would like to extend my gratitude to the speakers who shared their knowledge and expertise that will help to make our industry more productive, personable and profitable.”

 

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