Avoid the travel agentÆs fate
By the early 1990s, there seemed to be a travel agency just about everywhere from shopping malls to Main Street America.
Then came the Internet age and numerous travel agents were quickly swept away, because for the first time travelers were empowered to deal directly with airlines, cruise lines, resorts, and practically any other hospitality provider.
Freight forwarders ' often referred to as the travel agents of freight ' have fared better than their brethren in the passenger arena. In fact, most international trade volume is managed by a forwarder or other intermediary at some point during its transit.
However, forwarders are no longer the center of trade they once were. The Internet has similarly empowered exporters to connect directly with carriers in ways that were unheard of just a decade ago, threatening to cut out the forwarder in many respects. Unlike the travel agents, many forwarders have found ways to embrace Internet-based technology to reinsert themselves even deeper into shippers' supply chains.
'Management Dynamics (MDI) is my hub for capturing carrier event management,' said Matthew Fleisig, vice president of RF International, a division of Pacer International. RFI has offered traditional transportation intermediary services including forwarding and customs brokerage since 1969. In January 2010, RFI rolled out its RFI360 system offering what's essentially a visibility and connectivity application based on MDI's technology.
|'There are two kinds of exporters. There are those who use a forwarder and those who do it themselves. We can fit both of those approaches and anyone in between.'|
'MDI's supply chain network has thousands of existing integrations with carriers, brokers, freight forwards and other trading partners,' said Nathan Pieri, MDI's senior vice president of marketing and product management. 'Based on the needs of our clients we activate these connections as part of an initial implementation.'
RFI is not the only forwarder leveraging this technology to meet today's logistics challenges. But the company's blend of in-house built and bought systems and the delivery strategy they have created around them makes for an interesting case study.
RFI opted to adopt MDI's technology instead of building its own to save on development costs, bring the offering to market faster, and achieve a higher level of functionality and increased connectivity. 'Our ideology is to invest today for tomorrow,' Fleisig said. 'Today we're way ahead of the curve as far as traditional freight forwarders are concerned.'
'Information technology is critical to capture and retain clients for logistics service providers, but industry surveys often report a gap between the client's expectation of system capabilities and demonstrated performance,' Pieri said. 'LSPs are increasingly turning to best-of-breed global trade management technologies to offer their clients a differentiated set of value-added services that grows share of wallet without the cost and risk of internal system delivery.'
RFI360 aside, RFI's overall technology portfolio is not much different than most traditional forwarders. FINDSxp, which stands for Forwarding Information Network Documentation System, is an entirely homegrown, custom-built system that traces its roots to a DOS-based program written in 1990.
'FINDSxp is our forwarding system; it manages traditional forwarding functions such as rate management, AES (Automated Export System) filing, documentation, and more,' Fleisig said.
'Our main business is pure freight forwarding,' he said. 'What separates us from other forwarders is our RFI360 tool and proprietary FINDSxp software.'
The company leverages this technology in conjunction with its services using an approach Fleisig described as 'value added forwarding,' or VAF, which is essentially a blend of services and technology options available to customers who want to customize to suit their needs.
'There are two kinds of exporters,' he explained. 'There are those who use a forwarder and those who do it themselves. We can fit both of those approaches and anyone in between.'
For those exporters who depend on forwarders to manage their shipments the answer is quite simple: traditional freight forwarding services fit the bill. In this instance, RFI provides the technology for a minimal recurring fee and generates the majority of its revenue via traditional freight forwarding fee models. What is more unique is the company's value proposition for exporters who feel they have limited or no use for a forwarder.
RFI360 is available to all exporters regardless of the volume they move through RFI. Exporters can operate in what RFI calls a 'remote' environment where the exporter manages its international transportation using RFI360 in a hands-on manner. Exporters who prefer to control their shipments in-house can key in their shipment details and regulatory filings and depend on RFI strictly for the transportation services.
RFI360 is also available to exporters who may not use RFI's forwarding services at all. In this technology-only model, RFI essentially resells MDI's technology. Exporters can use the technology to manage documentation, regulatory filings and move their freight via forwarders other than RFI, allowing them to save money on forwarding fees.
'We provide the tools to allow any exporter to manage the day-to-day, but unlike off-the-shelf freight forwarding software packages, we provide the support of a freight forwarder and all the capabilities we can bring to bear should an exporter utilizing our software requires the support of a traditional freight forwarder,' Fleisig said.
This non-traditional approach to what is otherwise an antiquated business is truly innovative. Breaking away from the forwarding industry's preference to build rather than buy technology has allowed RFI to tap new markets and bring new services to market.
'Forwarders were the hub of international shipping,' Fleisig said. 'Embracing MDI's technology in combination with our own software has allowed RFI to get back in the middle of things.'