Ongoing digitalisation, a booming online trade and ever tighter profit margins – small wonder that the future of the general cargo business has been uncertain for years. The fact is, the classic piece-goods cargo business is in decline and is no longer the driving force of the cargo business. Cargo is often too expensive compared to partial loads; in these times of online retail, parcel services are largely the preferred option. And the overcrowded market drives profit margins down. This is felt most painfully by the smaller hauliers.
A few big players rather than lots of small ones – the market is consolidating
Small and medium-sized companies don’t have it easy nowadays: prices for cargo are constantly falling but costs are increasing, which logically means that profits margins are taking a hit. Even though the general cargo business is currently a demand market where the shipping agents dictate what happens, that could drastically change. Because they have little in the way of capital at their disposal, smaller hauliers can often no longer achieve the margins they need to finance the business up to three months in advance, as is often required. The larger companies can do this.
At the same time, customer demands have also increased as a result of digitalisation: services such as the real-time tracking of goods being delivered are expensive but necessary. Family companies, of course, cannot keep up with the big names in the industry. The consequence? The small players could be swallowed up by the few big players, which buy into different family businesses and integrate them into their own network structures to remain competitive in overland transport. The number of suppliers will thus shrink significantly, while the market slowly but surely develops into a supplier market. So, it seems that the general cargo market will still be here, but greatly changed.
In future, we’ll need to find solutions together
The question is: how can the (smaller) general cargo operators position themselves to survive in this fiercely competitive market?
Marketplaces such as the spot request platform ShipstaGO, due to be launched in Q1 2020, enable general cargo operators to tap into new customer target groups and to automate sales. Using the ShipstaGO platform, shipping agents will get suitable quotes from different hauliers and/or general cargo operators for their short-term transport needs. The hauliers can create their quotes directly online and so shift their processes into a digital form. Not only will automating the processes save time, it will also significantly cut costs, making the general cargo operator more competitive.
Already now, SHIPSTA FLEX offers a truly end-to-end solution as an integrated process, including Rate Management, eProcurement, Freight Calculator, Scenario Designer, Freight Settlement and KPI Dashboard.
About SHIPSTA
SHIPSTA powers smart logistics procurement with a digital platform that connects shippers and carriers to ensure a frictionless procurement process for spot and contract buying, entirely online. It automates complex tasks, provides unrivalled visibility and supports fast data-driven decision-making. Designed and built by experts in logistics procurement, it is bringing transparency, automation and efficiency to the global logistics industry. It is used by some of the world’s largest companies to respond to market volatility, control freight costs and manage risk. The company was founded in 2015 and is based in Mertert, Luxembourg and Hamburg, Germany.
