The booking and payment experience is transforming global logistics

For freight, logistics, mid-to-last mile, we could say there are two eras – BP and AP – pre-pandemic and post-pandemic.

Freight CEO Zvi Schreiber told Karen Webster in an interview that before 2020, “a lot of people might not even know what a supply chain was,” he said of the industry of 20,000 billions of dollars. “Until it breaks.”

The supply chain, of course, is behind the scenes and integral to everything we own, buy and make. Look at the shirt on your back and 90% of the material and labor needed to put it on your local store shelves or e-commerce channels may come from outside national borders.

At the center of it all is pricing, which relies on transparency and predictability.

Until COVID-19, he said, supply chains were generally running smoothly. The speed bumps mainly came from strikes or bad weather (sometimes from natural disasters).

Now, he said, with wars and climate change and, as the pandemic has shown, the jagged nature of shipping makes the stock market look stable.

When the actual movement of commodities is shifted, prices become volatile and even go haywire. And that’s what we’ve seen, especially, over the past few years, as price spikes hit air and ocean freight, translating into higher prices paid in all kinds of B2B relationships (and ultimately, higher costs have also affected consumers).

See also: Freight platforms show their buoyancy on land, sea and in the air

Freightos’ own data shows this volatility: spot market prices rose 10x from pre-pandemic rates, then plunged amid macroeconomic pressures. Small changes in demand can lead to outsized price swings.

Moving prices online

Freightos, which has been in operation for eight years, is working to bring the prices of the huge international freight ecosystem online to help stakeholders discover prices and thus make real-time decisions about bookings, reflecting the rapidly changing dynamics of supply and demand.

The urgency for more transparency in pricing is there in an industry where surprisingly so much is done offline. Schreiber noted his dismay in his previous roles leading an import company years ago that there were no dedicated platforms for price comparisons and booking freight. This shortage stands in stark contrast to the fact that consumer-focused websites offering price comparisons and transparency have been around for decades.

But in developing robust digital conduits for determining prices and reservations, it should be noted that logistics are dynamic, Schreiber said.

And there is a bit of inequality as to which segments are more modernized than others in terms of technology.

Air cargo has been quicker to embrace digitalization – more so than ocean freight companies, he told Webster. For example, Lufthansa started leveraging application programming interfaces (APIs) years ago to improve and streamline data flows to speed up and even automate pricing and reservation activities.

This helped transform passenger flights into cargo flights as demand for the former declined during the pandemic and demand for the latter increased. There is still room for improvement – today around 40% of airlines use platforms (Freightos among them) to improve logistics operations, although he said airline-related bookings on the Freightos platform have been multiplied by 100 since the beginning of 2020.

“Containerized liners are also starting to come online,” Schreiber noted, as the preponderance of information is still tied to Excel spreadsheets.

It turns out that there are different levels of urgency to the extent to which price information needs to be “real-time”, depending on the mode of transport. The lag between booking and when ships set sail can take days or weeks – so waiting a day or two to receive quotes can be frustrating but doesn’t change the economics of the business itself.

See also: Freightos IPO filings show platforms’ place in digital logistics transformation

There is friction in the mix, as bookers and liners have established themselves along regional lines, with incumbent teams rigidly adhering to those territories and the aforementioned spreadsheets. Currently, it’s difficult to get them to commit to a single website where, in theory, anyone in the world can book and pay for freight.

But the trend is inexorable.

As Schreiber noted, “Companies that don’t have the automation and the digital connection are the ones that are going to miss out.”

The same data that is used for price discovery and booking can (and should) also be associated with the payments themselves. And transactions, he said, is another area where the platform model shines.

Payment obligations can change quickly depending on external factors, such as the weather, or if the weight of the actual cargo changes.

And as Schreiber said, “the key is being able to book and pay – and reconcile those payments – in one place.” Ease of payments is a boon, especially for CFOs, who want to quickly agree on payment terms (30/60/90 days) and know what different exchange rates mean for business results. company.

To that end, he said, Freightos’ Web Cargo offering has, on the same online page where stakeholders search, book and prepay through digital wallets, in some cases obtain established credit terms . This streamlined process is a lifeline for the thousands of small freight forwarders who operate and need democratized access to airlines and other entities.

“Payment terms,” ​​he noted, “can help cash flow significantly.”

Look forward

By 2025, these structural changes will be more entrenched in logistics as real-time payments become more widespread, especially with FedNow. Schreiber said RTP represents a game changer – cutting out middlemen and reducing reliance on cash to move cargo. “It’s a digital way to do the same processes, but in a much faster way.”

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