Freight Rate Procurement: The Amazonization of Logistics

From private life to work

Let’s look at the development of technology over the last 20 years: There is a trend to see technology becoming established in the private sector and then adapted in the business sector afterwards.

The use of the Internet was still something for freaks in the early 90s. Today, it is indispensable in both the private and professional environment and has led to numerous new technologies. Instant messengers such as ICQ were previously used by (almost) everyone for private communication. Today, fast informal exchange is the order of the day, even in the business environment via Skype, Slack or Teams.

There are several comparable cases. It always took a little time until the business world adapted and implemented the technologies. This is also due to the fact that the same people who used to host “nerdy” LAN parties are only now in leading positions to push those technologies forward. A new generation has taken completely different procedures for granted.

Digital change in shopping

How has the purchasing of products and services changed?

At Booking.com we get an overview of all hotels and trust the reviews of other guests. At Zalando we receive suggestions for shoes that match my purchased jacket. At Amazon we have learned over the years that almost all products can be at my doorstep by tomorrow.

So at least three things have changed slowly but steadily in our shopping behaviour:

• Transparency
• Recommendations from others
• Convenience

It was a slow process, but everyone feels that it is irreversible.

If we look at freight rate procurement, we see that this effect has not yet fully impacted the professional world. The reality here is still bulks of Excel files, e-mail communication, manual effort and – sad but true – fax machines.

Freight rate procurement in the future

At SHIPSTA, we believe that the same trends from private life are spreading to freight rate procurement and logistics in general. The private environment sets the direction and is adapted by the professional environment.

A high level of transparency will become the main focus in the coming years, recommendations from other market participants will also have an impact on the business sector and freight rate procurement must become more simple and convenient.

In the future, freight rate procurement will be done in a standardized way via platforms. The process will be similar to what we know from the private sector. “Companies that booked Logistician A were also be satisfied with Logistician B”. In addition, Logistician B has a 5 star rating and can be contacted with one click.

There will be an Amazonization of Logistics. That what we know from the private sector we are going to take with us into the business world. We at SHIPSTA are working on this and are inviting you together with us to be a pacesetter in the digitalization of logistics.

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