CargoSphere reveals half billion cost to FFs to manage ocean carrier rates
Drewry Supply Chain Advisors commissioned to determine annual cost burden to global freight forwarding community.
March 21, 2017
By kelsea koh
CargoSphere, the single rate platform for frictionless rate distribution, networking and cloud-based freight rate management, today announces findings, from an original research project commissioned from Drewry Supply Chain Advisors, which quantifies an annual cost burden of US$500 million for freight forwarders (FFs) to find and manage ever-changing ocean carrier rates. The US$500 million expense represents costs incurred by only one ocean shipping business segment. It does not include the inefficiencies and costs incurred by the rate originators, ocean carriers, or BCO (beneficial cargo owner) shippers. Furthermore, it also does not include the cost of system investments to support or reduce labor costs.
CargoSphere commissioned this research to quantify the inefficiencies they have been working to ease for more than ten years.
Drewry Supply Chain Advisors Research
After defining the size and makeup of the global FF industry, Drewry conducted primary research with a sampling of small, medium and large FFs. Drewry determined the time and effort to receive and process rate sheets, determine global tariffs and create a way to compare carrier options and look-up rates.
It was determined that the global FF industry annually spends 24.4 million hours doing buy-rate management including inputting rate data into their company’s internal systems. This time and effort adds up to an overall annual cost of US$500 million to the global FF community.
CargoSphere’s SUDS, eSUDS and the Rate Mesh solutions tackle this serious industry problem to eliminate cost and a colossal operational burden. These solutions also accelerate the movement of real-time rates from carriers to forwarders so they can more rapidly quote and service their shipper customers and thereby strengthen relationships.
“The cost burden of global ocean freight rate processing is a huge weight on the industry as a whole. One that is not sustainable for global FFs, carriers or BCO shippers. This exorbitant cost underscores the need to focus on digitizing all aspects of rate management, networking and distribution, as it is an extremely important business enabler for global ocean shipping. After all, what company today has the luxury of ignoring technology solutions that can improve productivity, competitive position, and customer satisfaction!” said Neil Barni, president of CargoSphere. “Our vision has always been to align our technology with the needs of the industry to improve business performance, rather than promoting disintermediation or a race to the bottom for carriers and forwarders.”