The import-export game is not an easy one to play, and sometimes logistics can be anything but logical — especially for smaller firms that go the traditional route. These groups use middlemen known as freight forwarders, acting as agents who work with service providers like trucking companies and customs agents.
One company, Fleet, which originally launched as Shipstr in 2014, seeks to change the way logistics is done through an online marketplace. The platform offers a one-stop-shop for small and medium-sized businesses (SMBs) to find, rate and get quotes from freight forwarders in a much timelier manner than traditional routes — and all to match demand and capacity.
In an interview with PYMNTS, Fleet CEO Max Lock said the international logistics process is broken, particularly for smaller companies navigating one that is anything but transparent.
“What we realized was that all of these people actually moving the freight were really disconnected from the people who are booking the freight,” Lock said. “So, we asked ourselves why…and part of the reason was that there was no technical foundation that allows the people who book and manage the freight to connect with those end service providers.”
Thus Fleet’s platform was born, allowing importers and exporters to connect directly with truckers and warehouses.
“This means bringing their pricing, their capacity, their financial settlement tools all [work together] online through one platform,” he said, and it's all handled via application program interface (API).
The standard, traditional way of logistics includes a business seeking to get, say, paper cups sent from China to California, undertaking a series of decidedly manual, inefficient tasks. How about getting online and Google searching for freight forwarders?
It's not easy, as “there are thousands and thousands of freight forwarders in the United States,” according to Lock, “and hundreds of thousands of them across the world….then you call them up and say ‘I want a quote’ for this shipment leaving China…to California.”
Then a waiting game begins, with the business wanting to ship relaying the details to the forwarder and looking for a quote — one that can come up to three days later.
“What the forwarders are doing [when assembling that quote] is calling and emailing the providers that he or she needs to line up,” he explained, and that's to move the aforementioned goods from China to L.A. This would involve contacting truckers and warehouses in China, and perhaps lining up customs brokers and steamship lines. All this reaching out entails manual processes on the back end as well, and paperwork abounds at all stages of the process.
When that quote does come back to the small business, it is in the form of a single price, without clear delineation of what the trucking company is charging, to name just one link in the logistics chain, or even what transport lines are going to be employed.
“Basically they’ve commoditized the market [with] the offer of services,” Lock said of the freight forwarders. “We kind of equate this to booking a trip through a travel agent and not knowing what car you are going to get, what flight you are going to get. No one wants to book a trip that way, and no one wants to book inventory that way.”
There’s also a lack of detail about sailing schedules, insurance documents and any other number of steps in getting goods from place to place, all of which are crucial to the SMB owner in running operations in a timely manner.
The middleman, of course, wants to add as much margin and pick the lowest cost provider as possible. It might not be seeking out the most reliable firms, or perhaps may not have the proper insurance documents in place — anything, in short, to gain the largest margin possible.
Against this backdrop, the smaller business is at a disadvantage, as it does not bring the volume that larger players do — think Walmart, for example — and the big players get attention and customer service that may be lacking for SMBs. The online option as offered by Fleet is a differentiator, according to Lock.
“We, ourselves, are not trying to be a freight forwarder,” he explained. “We are trying to be a marketplace … We solve the regulatory problem by being licensed ourselves [and] there are silos within the logistics space. You have pricing data, capacity data and tracking information and settlements.”
The SMB that comes to the Fleet platform enters information about a shipment. The firm “knows all the service providers they need to get” goods where they need to go, Lock said. Using the example of freight moving from China to LA, the user is presented with a range of, say, five different trucking companies in Shanghai along with their pricing, capacity and performance rating on the Fleet platform.
Thus the logistics choices are in the hands of the customer and the opacity of the middleman is removed. In a matter of minutes, smaller firms are able to build out their entire supply chain, he noted, and in stark contrast to the days it would have taken to get a quote before, sans attendant emails and faxes. Beyond the time savings, cost savings accrue — as much as 15 to 20 percent on activities tied to logistics.
The firm got a vote of confidence in a $10 million investment spearheaded by Lufthansa announced this month. Lock said some of the funds will be earmarked for the engineering side of the business, as “all of this technical work requires a robust engineering team.” The other portion will go toward sales and marketing efforts, scaling them to better reach SMBs.
PYMNTS tossed the CEO the inevitable question: Blockchain?
“Maybe if we add ‘blockchain’ to our name our value will go up 500 percent,” he joked. “I’m a believer in what blockchain has to offer,” though he maintained he is “skeptical of some of the applications that have been applied to the international shipping space today.”
For example, Lock noted that the recent blockchain-centric agreement between IBM and Maersk is focused on document authentication, which is important “but is not fully utilizing the benefits of the blockchain.” In addition, the complexity of getting even a simple quote to make the jump to blockchain “seems like a far reach” to him.