The future is already happening, and it’s starting to pass many of us by.
You missed a great and important meeting in NY.
Not that you need any more things to be concerned about, but this is really important. The very survival of your business could be at stake. And while that sounds extreme, let me tell you, IT IS.
It’s critical that we stop and consider what’s happening all around us that could very well spell opportunity or disaster for our future. The wave of the future is cresting, and we had better figure out where we want to be on that wave.
And so we did. Globalink organized and help a two day conference in New York to focus on the major challenges facing independent forwarders. 11 Globalink members met in NY on July 22 and 23 to explore and discuss the many coming disruptions to our current business model. We had a great cross section, big, small and medium companies as well as two from Asia, two from Europe, two from Canada, two for Mexico, and three from the USA. It was pretty representative of our industry.
The night before the meeting the group went out to a dinner sponsored by David Marx and Express Air Freight. What was interesting was the different perspectives that were shared in regards to Amazon, which were soon to be challenged the next day.
Our first day was spent on Amazon, and I’m pretty sure you could spend a week on this topic. What stood out was how little the group really knew about Amazon, how it works, and how and why its moving into the logistics business.
The take away from day 1
The Forwarding and Logistics business is very resistant to change and its almost depressing when the model we’ve all grown up in, doesn’t appear to be all the viable for the future. At the end of day one, most of the room was pretty low.
Amazon is willing to spend whatever it takes to build a platform for their clients and other companies to use to ship product internationally seamlessly and easily.
Amazon isn’t really interested in taking over UPS or FED EX, its not even part of their focus. Their focus is the control the customer, in ways those companies aren’t even thinking about.
Fabrizio Corona of IVT of Italy welcomed everyone to a wonderful dinner to close out day 1.
On day 2, we expanded our survey of longer term trends that will soon be affecting our industry. We discussed the effects of 3-D printers and how drastically it could change supply chains. This is happening now, but in 3 – 4 years, this could be a major factor. We talked about other factors like autonomous trucks, cars, uber and lyft, drones, and a few other technologies.
We spent time on the major impact the millennial generation is starting to have on logistics, as well as the fact that logistics and transportation has certainly attracted the attention of Venture Capitalists, who see our industry as ripe for transformation and technology.
There is no doubt the industry is changing and the old model is not what’s going to work of us in the future. I shared a quote from Jeff Bezos, the CEO of Amazon with everyone,
“What we need to do is always lean into the future. When the world changes around you and when it changes against you–what used to be a tail wind is how a head wind–you have to lean into that and figure out what to do because complaining isn’t a strategy.”
I shared a study of 14 of the top integrators / logistics providers, and how all but two had decreasing revenues, some significantly when comparing the first quarter of last year to the first quarter of this year.
I also shared the results of a recent survey of 92 top logistic executives, and I can summarize that here, very briefly.
The top challenges to our industry are:
1. Eroding Margins. The core services of Global Forwarding are no longer driving growth.
2. Increasing Customer Expectations. Customers are expecting forwarders to automate services and provide transparency.
3. New Emerging Players. Automation is powering growth for emerging players (like Amazon).
Yet despite all this, only 14% of the executives felt threatened by these trends, why?
According to this survey, there are three key areas to focus on for going forward.
The key areas are:
A. TECHNOLOGY is the preferred method (86%) to drive efficiency and reduce costs.
B. VALUE ADDED SERVICE OFFERINGS, are the next most preferred method (63%) of increasing revenues and profits as core services (air, ocean, and trucking freight) become less profitable
C. GROWTH, organic or via acquisition.
I know it’s been hard to come by, but here is the GOOD NEWS.
WE HAVE A VERY UNDERUTILIZED TOOL AND TECHNOLOGY THAT IF USED CORRECTLY WOULD SIGNIFICANTLY SUPPORT ONES EFFORTS IN THE ABOVE AREAS.
Would you like to know how?