Infographic: Categorizing the forwarding technology wave

Infographic: Categorizing the forwarding technology wave

Technology investment by forwarders has traditionally revolved around solutions that help them manage so-called back-office functions such as accounting, human resources, and sales. That eventually expanded to include tools related to purchase order management, shipment management, and cargo visibility as shippers sought logistics services beyond the securing of freight capacity that could be coordinated and executed digitally.

Investment decisions in those areas were essentially binary choices for forwarders: buy a brand name software with cache in the forwarding space, or build a proprietary tool.

But the last five years has seen an explosion in software-as-a-service (SaaS) companies aiming to arm forwarders with customer-facing tools, principally to let them quote online, and in an instant fashion. In essence, these software providers are focusing on an area that was relatively underinvested compared with technology investments in background operational systems.

The rise of these forwarder-focused SaaS companies is in direct response to the emergence of a new category of forwarder over the last decade: the digitally oriented forwarder. Whereas SaaS providers offer neutral tools, digital forwarders have a traditional third-party logistics provider (3PL) model, only underpinned by a reliance on more recently developed technology.

All of these companies — whether SaaS providers or digital forwarders — have built their instant quoting capability on the foundations laid by the rate management software providers that came about in the early 2000s and still serve as integral solutions providers to the forwarder community. Rate management systems allow forwarders to manage the rates they’ve negotiated with carriers in different modes and add margin before quoting their own rates to shippers.

In fact, many of the companies listed here have found ways to strategically partner, in an attempt to amplify their aggregate value and compete with the might of established forwarder operating system providers.

Note: This graphic focuses on technology companies oriented around the provision of freight rates and doesn’t include a broad wave of SaaS solutions aimed purely at visibility, shipment execution, and bid management.