The ability to harness the right data from the seemingly endless stream of data available to shippers, carriers, and intermediaries is key to more accurately forecasting how much space is needed on a containership and when it is needed, speakers said at JOC’s virtual TPM21 conference Thursday.
Jonas Krumland, CEO of Logward, a logistics software company, said there are three things beneficial cargo owners (BCOs) need to manage this year after a tumultuous 2020: the ability to collaborate with carriers on sourcing freight capacity and managing individual ocean trade lanes, forecasting capacity requirements eight to 12 weeks out, and tracking vessel strings for blank sailings.
But how well BCOs can manage those depends on the quality of data they use. “BCOs spent more time putting out fires last year instead of utilizing the right data for freight procurement and allocation,” Pieter Kinds, CEO of Freightender, an online sourcing platform, said. Instead, a holistic approach is needed, he said, adding companies need to invest across the entire process.
Indeed, shippers need to focus on such data as volumes and equipment requirements and data from such systems as transportation management systems (TMS) and warehouse management systems (WMS).
But Patrik Berglund, co-founder and CEO of air and ocean freight rate benchmarking and market intelligence platform Xeneta, said it’s rare that he comes across companies with good data quality even though he considers good data quality a basic necessity, particularly when it comes to negotiating with carriers. The savviest shippers and carriers are the ones that can bring reliability and predictability to the procurement and allocation process.
“We’re in an ultimate sellers market where that fundamental trust between shipper and carrier is critical,” Berglund said, “At some point, it will turn, and it will be a buyers market, and then carriers will want that trust.”
Krumland agreed and said it is about bringing visibility into what’s happening. “There is the shippers’ rate and the transportation budget, and then there is the delta in between,” Krumland said, “with collaboration as the key.”
Technology only helps automate the process, but once that is done, partnerships are developed for collaboration.
When asked about the forwarders role in the procurement and allocation process, Kind said, “Forwarders, carriers, and shippers all have different sets of data, and when you have only a few carriers in the market, it’s hard for forwarders, who are sitting in the middle, to make an impact. I think we’ll see a lot more consolidation in forwarding, which will help improve efficiencies.”
As for expectations in 2021, Berglund noted that the traditional way of doing 12-month contracts comes at a risk and will likely tie shippers at high rate levels. Instead, the way to approach the market this year is to be flexible and nimble. “Break the procurement process into pieces,” he said. “There are opportunities out there, but be sure to have good data quality available when having those conversations with carriers.”
Contact Cathy Morrow Roberson at [email protected] and follow her on Twitter: @cmroberson06.