Book and Pay Experience Transforming Global Logistics

For freight, logistics, for the middle mile all the way through to the last mile, we might say there are two epochs — BP and AP — before pandemic and after pandemic.

Freightos CEO Zvi Schreiber told Karen Webster in an interview that before 2020 “many people may not have even known what a supply chain was,’ he said of the $20 trillion industry. “Until it broke.”

The supply chain, of course, is behind the scenes and integral to everything we have, buy and make. Look at the shirt on your back and 90% of the material and labor that’s gone into getting it onto the shelves in your local store or across eCommerce channels may have originated beyond home borders.

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

Until COVID-19, he stated, supply chains had run smoothly for the most part. Speed bumps came mainly from strikes or bad weather (sometimes natural disasters).

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

When the actual movement of goods is displaced, pricing gets volatile and even goes haywire. And that’s what we’ve seen, most significantly, in the past few years, as peak pricing has hit air and ocean cargo, translating into higher prices paid throughout all manner of B2B relationships (and eventually, higher costs hit consumers, too).

See also: Freight Platforms Show Buoyancy on Land, Sea and Air

Freightos’ own data shows this volatility: Spot market pricing surged by 10x compared to pre-pandemic rates and then plunged amid macro pressures. Small changes in demand can lead to outsized shifts in prices.

Moving Pricing Online

Freightos, which has been operating for eight years, has been busy moving pricing online for the massive international freight ecosystem to help stakeholders discover pricing and thus make real-time decisions about bookings, reflective of the swiftly changing dynamics of supply and demand.

The urgency to get more transparency into pricing is there in an industry where so many activities are surprisingly done offline. Schreiber noted his dismay in his previous roles running an import company years ago that there were no platforms dedicated to pricing comparisons and freight booking. That dearth stands in stark contrast to the fact that consumer-focused websites offering comparison shopping and transparency have been around for decades.

But in developing robust digital conduits to determine pricing and booking, it must be noted that logistics is dynamic, said Schreiber.

And there’s a bit of unevenness as to which segments are more modernized in than others in terms of technology.

Air cargo has been quicker to embrace digitization — 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 booking activities.

That enabled passenger flights to be transformed into cargo flights as demand for the former waned in the pandemic and demand for the latter surged. There is still room for improvement — today, about 40% of the airlines are using platforms (Freightos among them) to improve logistics operations, though he stated that airline-related bookings across the Freightos platform have soared by 100x since the beginning of 2020.

“The containerized ocean liners are starting to go online too,” noted Schreiber, through the preponderance of information is still tied to Excel spreadsheets.

It turns out there are differing levels of urgency in just how “real time” the pricing information has to be, depending on the mode of transport. The lag times between booking and the time the ships set sail can take several days or weeks — so waiting for a day or two to receive quotes may be frustrating but does not change the economics of the activity itself.

See also: Freightos IPO Filings Show Platforms’ Place in Logistics’ Digital Transformation

There’s some friction in the mix, as the bookers and the ocean liners have set themselves along regional lines, with teams in place that rigidly adhere to those territories and the aforementioned spreadsheets. Currently, it’s a hurdle to get them to commit to a single website where, conceivably, anyone in the world can book and pay for freight carrying.

But the trend is an inexorable one.

As Schreiber remarked, “the companies that don’t have the automation and the digital connection are the ones who will be missing out.”

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

The payment obligations can quickly change depending on external factors, weather for example, or if the weight of the actual cargo changes.

And as Schreiber said, “the key is to be able to book and pay — and reconcile those payments — in one place.” Ease of payments is a boon, especially for CFOs, who want to agree quickly on payment terms (30/60/90 days) and know what different FX rates mean for the corporate’s bottom line.

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, get credit terms established. That streamlined process is a lifeline to the thousands of smaller freight forwarders who operate and need democratized access to airlines and other entities.

“The payment terms,” he noted, “can help cash flow significantly.”

Looking Ahead

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