In a press release on Oct. 13, Singapore-based logistics tech company Cargobase — a leading spot-buy freight platform — reported a year-over-year 273% increase in revenue in “Pandemic Procurement,” a facet of its platform which automates the manual procurement of freight.
Overall transactions on the platform have also increased by 240%, marking these figures as the highest record of growth since the platform’s inception in 2013. Most of this growth occurred in the third quarter of 2020, and Cargobase doesn’t anticipate the growth to slow as it views the pandemic’s effects on the global supply chain as likely permanent.
The pandemic’s well-known supply chain disruptions — factory closures, lane disruptions, the tightening of on-time and in-full retail requirements, and increased transit times — have forced more shippers to look for capacity in the spot market, as opposed to relying on traditional contracted agreements with logistics providers.
“The main reason for this surge is that shippers (e.g., manufacturers, etc.) either can’t get or can’t rely on agreed long-term rates anymore due to the changes in capacity,” said Wiebe Helder, CEO and founder of Cargobase, which services Fortune500 companies like Siemens and Bosch. “The COVID-19 pandemic has dramatically increased rates and transit times. In May 2020, Cargobase observed airfreight quotes between China and the U.S. fluctuating between US$3 and US$30 per kilo. These disruptions in the supply chain have forced shippers to procure freight services on the spot at high cost, whilst keeping an eye out for the next most cost-effective solution — a key feature the Cargobase team has mastered in our platform with our unique quoting mechanism.”
In a galvanized effort to help the global shipping community adapt to the “new normal,” Cargobase’s solutions extend past freight procurement into analytics, invoicing and auditing, freight management, rich data, track and trace, and publishing pandemic trends and intelligence. Its mobile application — Cargobase On The Go! — helps shippers communicate quickly and efficiently without relying on email. In addition, Cargobase announced its imminent launch of a customizable Freight Tender solution, which will help shippers procure mid-to-longer-term freight.
Helder called the pandemic a “boon” for companies able to shift gears quickly and utilize the equalizing effect of automation, whereas companies that rely on legacy systems have experienced the pandemic as a “bane.” Cargobase data reveals that the top 25 freight forwarders are now only winning 30.5% of the freight they submit bids for, as opposed to their previous rate of 53.3%.
Logistics providers, the release stated, are more “aggressive than ever,” evidenced by the Cost Avoidance increase of 17.9% across all freight modes. The report defined Cost Avoidance as the difference between the average price quoted and the final quote chosen.
“The current crisis is demonstrating the adaptability and capability of Cargobase’s suite of solutions,” said Helder. “It is the most challenging time the industry has ever faced, and we are proud we can help our clients navigate these times.”