The Helm #4 - The Silver Linings of Congestion x e-commerce Logistics

Thanks for following along with us and subscribing to The Helm?, where I quickly share some of the relevant news items and trends we're paying attention to and thinking about at Cargologik:

1. Relevant supply chain news and tech, (+trends when we find out/read about them). We shift focus today to the supply chain's magic word: e-commerce. Back again from Edition #3. ????
2. What we're learning from the independent, small to medium-sized, freight forwarders and brokers - which remains the toughest to challenge in the forwarding landscape. ??????????????
3. How we push the boundaries of freight forwarding/brokerage tech with our independent freight forwarding and brokerage clients. ????

I’m a few months late on this edition of The Helm, our Cargologik newsletter. We've had a wild few months doing many of the early-stage startup things that kept us busy and publishing more regularly. So let's get to it then and we'll have you back to the day-to-day of your super busy logistics day.

ps. We’re going to take a break from the standard “newsletter” format to bring a very exciting version of The Helm. One that speaks a little bit more to why we're so bullish on what's happening today and the secret opportunities laying "dormant" in today's wild shipping world and where opps exist for independent, logistics companies.

What's going on at Cargologik & the independent freight forwarding world?

We’ve been staying busy at Cargologik, and despite perhaps the lack of marketing output in some areas, the one constant that has not changed is the sheer number of conversations we continue to have with the market. Yes - we are a relationship-oriented team, and we do love to talk to our market to build a robust and globally scalable product (141+ countries now). But more than just that, we have direct ties to family businesses and direct SaaS experience in past ventures within the supply chain, logistics, and shipping realms. 

The reason why we have had roughly 800+ conversations with our independent, international freight forwarding market (conservative estimate, approximately 1800 contacts in our Hubspot CRM) and must continue to have them is manyfold. Pandemics, trade spats, supply chain in flux are there. Still, for the great team at Cargologik, it’s all about creating a globally scalable platform and venture that can scale and directly impact the wellbeing of “the middlemen” and their stakeholders.

International Freight Forwarding is a Crazy, Beautiful, & Networked Game

The nuances of freight forwarding are many. What one international forwarder requires in Lagos, Nigeria, isn’t the same in Sydney, Australia. The slightly different international forwarding models in Guayaquil, Ecuador, will not have the exact needs of our clients in Doral, Florida - and those needs will be much different for clients in Toronto, Ontario. This is naturally present all over the world - different ways of operating in that specific region. It's also one of the many reasons why I believe many of the existing freight forwarding solutions only dominate specific regions or lanes. We're aiming to break that mold. ??

For example, one of our African international forwarders, working with a major liner, starts with the bookings first. They’re not hunting down the customers to fill up the container, instead, they have an agreement with the carrier to “fill the slots”. This model is typically not that of the Americas-based international forwarder. The American forwarder or broker is starting with the customer first. Getting the Quote and working to obtain the options before making the booking for those carrier slots, and then presenting those to the client for approval. Gathering details is usually the toughest part of the freight game.

And yet, other forwarding operations do a “little bit of everything,” working with factories directly sometimes, and/or a larger network of forwarders they partner with to move cargo on behalf of the end customer. Often, the end customer, especially the younger they are in their own business, do not fully understand all the different relationships at play “underneath the hood. These players leverage their Global Sales Agents (GSA's) model to originate cargo or partner with other logistics companies who may “own” the end-customer relationship.  

It’s another reason why for us at Cargologik, it’s all about freight collaboration and communication. Not building a better TMS, WMS, CargoOS, freight marketplace, or anything else along those lines. ?????♀?

It's a very fragmented market and in general, a fragmented software landscape....ripe for an added, customer-focused, collaboration and communication layer that can work between systems and API into other platforms.

JOC Senior Tech Editor Eric Johnson recently discussed how this has evolved in his latest Substack article, "Logistics' fragmentation inclination" sent out earlier today:

"This fragmentation, against all odds, has permeated the world of logistics software too. A decade ago, in a former role, I surveyed shippers regularly and those surveys always found shippers wanting to shrink the number of systems they use. They wanted to consolidate, or find single platforms that handled multiple functions. In part, this was sold as the promise of cloud-based solutions that were updated quarterly or monthly, where new modules could be downloaded and implemented in no time."

I encourage you to sign up for his substack, it's one of the industry's greats and he goes on in his piece to later discuss how the advent of APIs & microservices are lessening the impact of this fragmentation.

A more compelling need for transparency & better logistics collab

GSA’s are pretty neat, and the more clients we speak to, the more we find having a tool to keep everyone aligned and collaborating where all have visibility into the forwarding processes becomes that much more invaluable. As these partnerships grow, often similarly specialized in the same trade lanes or commodity, naturally, they resemble a few aspects of traditional freight networks. 

The end-customer may be the shipper and the leading agent who owns that relationship differentiates and offer added value to prospective clients through these partnerships. This value can be in a variety of price, expertise, the partner agency’s network, in addition to the trade lanes, cultural benefits, etc. 

And often, the originating or destination partner each hold their complementary value where it makes sense to create a lasting relationship and partnership together. Usually, you’ll even find one another lending office space to each others’ reps even within their own regional offices.

So you have all these different players, all collaborating alongside each other in a complex manner, and you’re tasked with managing all of this on dated systems, pen & paper, and spreadsheets. Even some small-business friendly cargo operating systems are often too expensive, cumbersome to purchase and find difficulty getting the system effectively implemented. There are just so many barriers along the way. It’s no wonder why everyone generally goes back to the ol’ Whatsapp messages forwarders and brokers have to contend with so often, repetitively. ????????

“Hey, where’s my cargo?” (& you want it, by when??)

At this point, we’re all well aware that despite the Suez Canal blockage which added to delays, existing pandemic mutations popping up threatening trade, and that new supply chains are being forged now to diversify against unforeseen business challenges. 

The second constant to increasing complexity and variables is general human behavior. As humans, we tend to stay at regular consumption levels and if one means of acquiring those goods, such as retail, shuts down or becomes too expensive, consumers naturally go towards the next best, safest alternative: doing light research and ordering from home with just a few clicks.

Thus, It’s no surprise e-Commerce continues to accelerate at a rapid pace, building momentum, and that doesn’t seem to be stopping anytime soon. Let's unpack that a little further, please read on.

Consumers gonna consume, consciously, and often impatiently:

This new consumer landscape is fortifying those “2-day shipping” customer expectations and structurally modifying behaviors at the consumer level. New generations are also supporting ESG companies being responsible, driving social good, and promoting sustainability. New and old ventures understand this, and more and more of these new brands are also coming online every day to meet this demand. ??????

A great Harvard Business Review article characterizes this movement best:

"That’s because recognition is growing that this data has real value and can drive better investment outcomes—not in every case, but in enough cases to make a material difference to investors. Furthermore, while ESG factors can affect a company’s bottom line directly, they also affect a company’s reputation, and business leaders and investors are recognizing the potential costs of not managing firms’ ESG risks.”

Regardless of whether you like it, or not, logistics operation will still likely need to meet that conscious capitalism, “amazon-like” expectations, or likely lose market share over time.

There are almost always more consumers down the value chain expecting that good or service that the shipper relies on you as the forwarder to get to them - on time and on budget. Their success is dependent upon you as the forwarder being great at your job. And they will choose you based on how you also execute on their behalf. 

Every successful business owner knows that the success of their business depends on that of their customer. Success drives success. In this case, the logistics service providers, distributors, forwarders/brokers, agents, and their partners have to show that they are well equipped to handle the expectations pressed upon them by consumers who may not even represent their direct clients.

This is why it’s so important, especially now, for independent players to embrace tech and the modern end consumer.

Enter the modern eCommerce brand & D2C/CPG Goods ?? →

Backing up some of the “claims” above is not only our conversation but also that of McKinsey’s global transportation team, who recently put out a fantastic piece entitled, Unlocking the Omnichannel Opportunity in Contract Logistics:

“E-commerce sales have soared by 160 percent between 2014 and 2019, six to eight times the rate of growth in traditional retail. This global trend has only been accelerated by the pandemic—ecommerce rose from 13 to 17 percent of total retail within a year.1 And the shift is likely permanent. Our COVID-19 retail-recovery survey finds that online penetration is expected to stay six to 13 percentage points above pre-COVID-19 levels.”

I'm an avid reader of their transportation coverage - not only from the quality of content and key trends and stats like above but for fantastic infographics, such as the following highlighting opportunities for Omnichannel logistics players and service providers:

Starting with the core operation ?????♀????????

Cargologik is a freight collaboration and communication platform for the independent logistics players working on the same shipments. The idea behind our system was always to empower both freight forwarders and their clients with a lightweight, easy-to-adopt, & easy-to-use system with APIs ready to integrate. 

That took away years of “hey, where’s my cargo?” redundancy too often correlated with great service, when in reality, being the differentiated logistics provider to these shippers should be more strategic advice. Free up the repetition and costs associated with the same things over and over. Get rid of the excessive calls, texts, and emails that keep LSP’s from leveling up and operating more strategically.

Operating with a sound strategy is absolutely the name of the game for logistics service providers and key for independent survival in 2021.

Enter the D2C, CPG, e-commerce startup world

A recent Forbes Tech Council piece frames the current status of things quite well:

“Twenty-seven years later and the quirky novelty of shopping online is now the engine behind modern retail. In 2020, an estimated $1 out of every $5 spent on retail was transacted online, as the e-commerce sector provided a lifeline to a sector largely shut down by a pandemic.”

Global commerce companies and platforms such as Shopify (check out those numbers!), Amazon FBA, WooCommerce, continue to do well as regular consumers opt more for direct delivery of their products right to their doorstep. Again, this isn’t going to change. Expect these numbers to remain high and only increase over time as the world figured out that “hey, maybe I don’t need to go to that local retailer after all!”.

Thus, you see the proliferation of fantastic e-commerce brands, new supply chain ventures, doing social good on a global scale. “D2C” means direct-to-consumer - bypassing the traditional wholesaler, retailer, “middlemen,” model. CPG is consumer-packaged goods that generally refer to the more conventional products.

Proliferation and self-organization of such brands at a GLOBAL scale

Recently, a #miamitech buddy of mine connected me to a rapidly expanding startup community filled with direct-to-consumer, CPG, distributors, manufacturers, copackers, consultants, and the like hyper-focused on these startup companies. 

Startup CPG was founded by Daniel Scharff, a South Florida-based entrepreneur who also runs his own venture, Miami Beverage Co. There are so many of these organizations now, and these brands are taking off faster than the 3pls can handle their loads.

A few fantastic e-commerce, d2c companies we at Cargologik love to watch:

• AddJoi - Tired of the same boring brands and types of milk that don’t agree with your stomach? Join the club...literally. And get better, plant-based alternatives delivered wholesale or directly to your door.
• Agricycle Global - a multi-brand, supply chain play involving quality sustainable e-commerce and retailer products, and also a raw ingredients provider as well. Product sources are impoverished women farmers in third-world countries. And doing so with the intention: “To Eradicate Extreme Rural Poverty.” Pretty awesome.
• OverEasy Foods - d2c brand also found in stores & aimed at the modern consumer, always short on time to that next pitch meeting, but knowing that she or he needs to eat a healthy breakfast. 
• Deliciou - Plant-based meats and seasonings, with a team aiming to make related cooking easier and more flavorful for the masses.

These fantastic brands can find their market, establish their supply chains and early distribution, pick the right logistics partners/staff, and all the while launching their startup. They’re raising funding, talking to their market, conducting studies, sourcing the best raw materials, and hiring - ultimately succeeding, despite the odds. 

And as you might imagine, at the earlier stages of these e-commerce brands, you lack the logistics “bandwidth,” and budget, to even effectively manage the forwarder or expensive 3pl handling that cargo on your behalf. Try juggling a few of them. It gets complicated very quickly. Trying to take care of this critical part of the business, while managing a core, budding operation, is insanely difficult. More often than not, they’re still getting lost in the texts, calls, emails, and lack of transparency. All of the typical logistics headaches that don’t really need to be there anymore. 

Ultimately, though, it’s the job of the forwarder or broker contracted to move that cargo, to manage it, keep the shipper in the loop of any potential problems or issues - and to have the plan in place to handle those exceptions. Getting that cargo to the end customer on time is the end goal of that entire supply chain (the brand, and the forwarder or broker), and the more the forwarder can guide and advocate on behalf of their shipper, the better.

So why’s all this exciting?

Aside from the above, leaving these two doozy stats here from Shopify’s blog:

“The growth of the DTC industry isn’t set to die down anytime soon. Data compiled in The Direct-to-Consumer Guide shows ecommerce is expected to account for 6.6% of all consumer packaged good (CPG) sales. The DTC movement accounts for 40% of the sales growth in the sector.

Two out of every five Americans have made a purchase directly from a brand or manufacturer, bypassing marketplaces like Amazon and Walmart. The result? By 2022, the number of DTC ecommerce customers will hit an all-time high of 103 million.”

Closing out

Figuring out how to add value to the shippers, in a way that is congruent with their own buying habits and logistics expectations - is the key. Regardless if you’re in e-commerce or not, constantly seek out additional “value” for your customers. 

It can be in gaining additional expertise, certifications to diversify your business, finding an agent/joining a freight network, embracing freight forwarding platforms, adopting new freight collaboration systems, and another tech that will help you further differentiate - and ultimately succeed in today’s market.

Complementing those efforts with the right technology-facing stack, regardless of if you use Cargologik or not, is critical.

Last, as we build in the open and transparently, quick ways we can use your help:

1. Start using Cargologik ??% free to move your first 10 shipments + give us your forward-thinking feedback on a customer success call. (IT'S FREEMIUM. Ping me or Luis F. Trujillo Jr. directly here on Linkedin to set up a free demo consultation, but we encourage you to take a look under the hood yourselves.)
2. Forward this article to a colleague, client, friend, or anyone else who may find this newsletter interesting. And if it's not worth forwarding, let me know how I can make it more interesting and useful.
3. Share, comment, and let me know how wrong or right I am below. We're always up for healthy debates and transparent conversations that help push the industry as well as our platform forward.