CoLoadX, an internet platform to enable forwarders to price effectively and allow non-vessel-operating common carriers to expand their sales scope, went live this week.
To Fauad Shariff and Petere Miner, the trouble freight forwarders have adapting to the internet age isn’t the threat of being wiped out of the equation.
It’s the fact that there’s too much pricing pressure for services that are irreplaceable to almost every shipper. For the non-vessel-operating common carriers (NVOs) that rely on volume from forwarders, the challenge is their selling opportunities tend to be limited by region or word of mouth.
So Miner, a former logistics procurement executive with HP, and Shariff, who ran a New York-based forwarder, built CoLoadX, an online platform that helps connect forwarders with NVOs.
The platform, which went live in beta mode this week, is designed to help forwarders get better and more dynamic pricing for their services and provide NVOs access to business they wouldn’t ordinarily get without the associated sunk sales costs.
“The need exists for price discovery,” Shariff said. “In the ocean freight business, forwarders are the de facto controller of cargo, especially in LCL (less-than-containerload). Shippers all agree they don’t know what happens in a LCL shipment. It could go through four consolidators, so a lot of the time, you hold your nose and hope it gets there.”
Focusing on the transaction point between forwarders and NVOs was a natural area of focus for Shariff and Miner, who have known each other for 15 years. Shariff’s experience as a forwarder led him to the conclusion that forwarders couldn’t be disintermediated from the supply chain, while Minere knew from her time at HP how important these service providers were and how frustrating it could be from the shippers’ side of things.
But they both agreed that the technology that forwarders and NVOs use was largely not adequate in the internet age, and did a poor job of keeping forwarder margins in a good place. NVOs, meanwhile, were simply limited by geography in terms of growing their customer base.
“For the forwarder, it’s tough to get accurate pricing on time in ocean freight,” Shariff said. “You go back to the customer, and you’re too high, or your price was right, but it was too late and so they gave the business to someone else.”
The CoLoadX platform is designed to provide an easy interface for forwarders to search for rates based on their shipment details. The goal is for them to extract more compensatory rates using technology as the enabler.
“Forwarders should be able to command whatever price they want because customers value them for their expertise,” he said. “They exist because of their service component. We’re matching trade lanes to quality NVOs, where you’ll find four to five NVOs per lane. Consider us a channel for incremental revenue. And NVOs don’t have to be restricted by their zip code. We’ll get you a forwarder who needs to move a shipment from Iowa to Doha next week.”
Shariff said the rise of Amazon and the way other retailers will need to adapt to keep up will also have an impact on forwarders and NVOs.
“E-commerce is going to change way a retailer forecasts,” he said. “And that changes their relationships with forwarders. There’s a need for instantaneous decisions.”
For instance, he said, imagine a scenario where a global e-commerce retailer sends a shipment from Shanghai to Los Angeles but realizes while the shipment is in-transit, that it actually needs to prioritize fulfillment to Brazil.
“You let a broker reroute a shipment from Shanghai to L.A. to Brazil at the port of L.A. rather than order another shipment from Shanghai,” Shariff said. “Shippers are desperate for forecasting and visibility. The amount of data collecting between the forwarder and NVO creates a data forecasting tool for the shippers. That gives them price discovery without disintermediating. That’s the big vision we’re articulating to investors.”
CoLoadX is, of course, not alone in its desire to bring modern technology to the logistics industry. Shariff and Miner have spent the summer participating in the Entrepreneur’s Roundtable, a technology accelerator in mid-town Manhattan where the two rub shoulders with budding application developers in other industries.
The accelerator has helped CoLoadX’s founders refine their offering, their model, and their pitch to potential investors.
“This is really about app-driven enterprises versus ERP-drive ones,” Shariff said. “With cloud, technology isn’t a barrier anymore.”
To that end, Shariff and Miner, through their development team, are working on building application programming interfaces (APIs) to bridge the rate information from NVOs and forwarders. The rate can be provided on the platform via PDF, EDI or API, but Shariff said the most efficient mechanism is clearly APIs.
That could include real-time bill of lading editing via an API.
“You can’t make it all about price,” he said. “You have to make it about how people work. Time savings and ease of work is the B2B answer to online shopping.”
Shariff said he and Miner don’t want CoLoadX to merely be a guidance platform.
“We’re a revenue platform for our customers,” he said. “We want high buyer intent. Price discovery already happens. The hoax with shippers is that their data has been held away from them and used against them.”
Technology for the forwarder/NVO meeting point
