Divide Is Widening Between Tech-Savvy and Traditional Forwarders
By: Air Cargo World May 19, 2017
The gap between the top-performing airfreight forwarders and those at the bottom, in terms of profit margins, appears to be growing wider, and may continue doing so for the next few years, according to results of a recent poll by Descartes Software and the U.S. Airforwarders Association (AfA).
In this year's annual "Forwarder & Broker Benchmark Survey," sponsored by AfA and Descartes, the poll asked more than 200 forwarders, brokers and NVOCCs about their views on the value of technology on their businesses. For almost all responses, the respondents that had performed the best in the last year were those that embraced technology and data-driven strategies.
For each response, the answers were categorized into groups based on financial performance in the last fiscal year. Those designated “top performers” were the respondents that had seen a rise in profit margin of more than 10 percent, while the “bottom performers” had reported that they were either “breaking even” or “losing money” in the last year.
In one section of the survey, the respondents were asked what strategies they preferred to prepare for coming macroeconomic and regulatory changes over the next five years. The top performers, by a more than 2:1 margin, favored investing in technology to help handle expected volume increases, while the bottom tier heavily favored cutting costs as a strategy.
“The top forwarders are clearly doubling down on technology,” said Brandon Fried, executive director of the AfA. “A lot of customers want data and want to automate it. However, the bottom performers showed very little interest in technology. They tended to want to ‘stay the course’ and cut costs in a race to the bottom. But the top performers realize that they cannot save their way to succeed.”