Post COVID 19: Acceleration in Digital Transformation - The New Normal for Freight Forwarders

The COVID-19 pandemic has caused unprecedented disruptions across various industries, forcing businesses to adapt quickly to survive. However, this crisis also served as a catalyst for digital transformation in supply chain management, pushing businesses to embrace new strategies and technologies to meet evolving demands.

Explores the impact of the pandemic on the logistics industry, highlighting the importance of digitization and how it has become essential for businesses to thrive in the "new normal."

The business disruptions caused by Covid-19

The business disruptions caused by the COVID-19 pandemic opened up a new challenge for all businesses worldwide, the requirement to digitize processes. When the pandemic had just started, the everyday operations and activities of the global freight forwarding industry were tormented and disrupted. Subsequently, this accelerated the digital transformation in supply chain management and helped businesses meet many new demands thrive during the pandemic.

Andrew Tunnicliffe writing in Ship Technology says, “There have been many losers during this pandemic. It’s fair to say a plethora of global industries is, if not failing, struggling to adapt to the current environment. Among those industries are individual casualties, the businesses that simply did not have the capacity, capability, or strategies to survive. Even for those that did, this period has been one fraught with difficulty and danger.”

COVID-19 affected the industry in a way no other crisis could. The last year saw some major impact befalling the logistics industry. During the pandemic, consumers have moved dramatically toward online channels. The companies and industries that were technologically prepared with cloud technology and virtualization adapted and responded to the crisis by shifting towards interacting with customers through digital channels and managed to survive the blow.

The disruptions brought by the spread of the novel coronavirus and the shutdown of businesses, especially in the logistics industry, accelerated the digital adoptions immensely. It forced forwarders to look into new strategies and digital solutions to continue to communicate, collaborate, complete work and function remotely and continue to serve their client base. Exploring many of the changes that have impacted the businesses required freight forwarders have to embrace the digital transformation and develop a better commercial strategy will significantly help them be ahead in the new race, in the “new normal.”

Digitization has been a much-talked topic in the freight forwarding industry for a while now. Even before the COVID-19 pandemic, digitization in the logistics industry was talked about as being an essential aspect of the sector. Digitization in the logistics industry is usually grounded on three actions. Firstly, the adaptation of business models that would help ease the operations—secondly, digitization of the main business areas like documentation, communication, etc.—and thirdly, building a robust digital base by updating the systems to enable quick solutions. The growth of digitization in the industry had nonetheless been slow. However, for the first time, due to the coronavirus pandemic, freight forwarding companies have realized the importance of technological innovations and technology and the need to transform into digital freight forwarding companies. Jeff Wehner, co-founder of freight logistics automation company, Haven Inc. argues that the drive to digitization is happening now faster than ever. According to Jeff Wehner, “The big change to the market is that everyone now realizes the criticality of digitalization. With staff working from home, forced to be virtual full time, companies have realized the incredible power of technology.” He also points out that firms have now finally realized that they could no longer depend on locally saved emails and spreadsheets or systems that do not support interconnectivity. Moreover, human errors sometimes cost significant money, and big firms cannot afford this misinformation. By digitizing your operations, you can also get complete transparency to address issues you would not have known about otherwise.

Alarm set by the pandemic

The pandemic successfully set off the alarm to the industry that the benefits of digitization in supply chain management and logistics are necessary. Taking into account the recent events, it is now clear that firms need to adopt strategies to sustain in the new normal. The post-COVID world is assumed to be characterized by flexible chains and multiple suppliers and forwarders on the drive to be the best. The former operations and practices used by the forwarders will not be beneficial in the current circumstance or the future. Moreover, digitization in the logistics industry has been a major factor in helping freight forwarding companies since the pandemic. Robots helped replace workers who weren’t available due to the pandemic, the Internet of Things helped monitor packages remotely, and Artificial Intelligence helped analyze, forecast, and manage the business. Logistics companies have been forced to learn to leverage technology to sustain in the industry and have a competitive edge. In addition, the benefits of a digital freight forwarding company are characterized by no more frantic phone calls, no more flipping through multiple screens, no more documentation binders, and more. It also improves safety and reduces informational errors.

The pandemic completely altered all business operations. Due to these changes, businesses are now obligated to optimize and digitize their operations. They are forced to develop and invest in technology and take a massive leap of faith towards digitization. Moreover, most companies now require digital solutions from forwarders to manage customers, their packages, and customer relationships. Technology and technological integrations can also reduce risks by allowing contactless deliveries, location tracking, etc. Greater and better use of digital tools has become part of the solution to deal with this inevitable crisis.

The events of 2020 have taught businesses many lessons. One major lesson the forwarders observed was that technologies and technological integration with logistics are an inevitable and ever-increasing phenomenon. COVID-19 has completely changed the logistics scenario and will continue to have a significant impact on the industry, at least for a while. Optimization and digitization in the logistics industry are the need of the hour to grow the freight forwarding industry and help businesses strive and thrive in the new normal.

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