In my past two posts I provided some thoughts about the readiness of the international transportation market for disruption. If this is your first read and would like to get more context you can read my last two posts.
As a brief summary in my first post the impact of technology was discussed. The conclusion is that technology has reached an effective point for the market to perform differently, it will be disrupted.
In my second post the discussion was about how customers make choices for service providers and how that can impact the market that exists today. Again, the conclusion is that the market has changed in a way that enables a different experience or a disruption.
There is a third part. With technology in place that will enable the market to perform differently and better for customers and with customer behaviors changing what are the barriers that can or will stop a disruption from occurring?
This Is an Old and Mature Industry
The initial thought was that this is an old industry and the largest barrier that exists resides within the industry itself. Forwarders and Brokers are so inbred that they have little interest both as enterprises and individuals to support disruptive change. As I thought about this I needed to set it aside because I believe the most significant barrier starts with the customers.
The Customer Barrier
Earlier this year I heard a tale from a freight forwarding customer. This customer started a small business to import paper cups. In this case the customer was one person who had identified a business problem and opportunity. The cups were made in China and were shipping from the Port of Ningbo to the Ports of Los Angeles and Long Beach where the containers were broken and distributed.
This tale was not one of a satisfied customer. Five different ocean freight forwarding companies were used, all with different prices and different (not better quality) in how they performed. This customer was looking for at least one that would perform consistently.
Why does using virtually the same routing either with the same or a different freight forwarder result in an inconsistent experience?
The answer is little to no transparency; transparency in service is becoming a trend that has helped improve quality and price in other markets. One example of this is in the travel industry where we can now see in relative terms how a particular provider of a service to us has performed. When you go to book a hotel you can see the experience of others who have stayed at that hotel. When I am traveling I look at the reviews, don’t you?
What happens in these cases is as individuals we are creating transparency by sharing our experiences. I have left reviews for hotels, restaurants, and home repair businesses. This is easy to do. It is my opinion and I am personally responsible for the result.
Here is the barrier. In a business environment we represent not only ourselves but our business. That business might be one we own personally but in most cases we are working for the business as an employee. The exposure to creating transparency is no longer personal. There is an increased sense of risk if we extend our personal views in a way where they also will reflect the views of our employer.
Over the past few months I have had the opportunity to read and listen to hundreds of customers give reviews of the freight forwarder. This is how this barrier manifests itself.
“I don’t want to publicly share my experiences”
“I am happy with the way things are”
“If I share I am also sharing my competitive advantage”
To enable a better experience, the customer will need to share. This means individuals representing that customer need to be willing to share and the leadership in those business need to encourage this behavior.
The Service Provider Barrier
I have been working with and for international transportation service providers since typing international Airway Bills while still in college / university as my part time job. The point here is I had started my perspective with one of a strong bias but also a firm understanding now of what barriers the industry itself creates. I have been quickly convinced that customers can break through this barrier.
Service providers have been focused on standardization for years. I’m one of those people who had the role of standardizing in three different large scale freight forwarders. Up until earlier this year I was convinced that this was the answer to gain competitive advantage and service customers better.
Let me tell you a secret I have learned. The barrier that is created by the service providers is standardization. What the market really needs is simplification. If the service providers simplify this supports and enables customers. Only the largest customers force the service providers to simplify.
Another way is for a large volume of smaller customers to behave the same way which will achieve the same result as a very large customer can achieve.
Jumping the Barriers
The way industry disruption occurs is to have a bold few blaze the way. The concept of doing reviews is definitely not new, but the concept of businesses supporting employees to give representative reviews of service provided to the business is different.
To make things better businesses and their leaders need to adopt the approach of encouraging their people to share feedback. The key is to have a place where both the business and the individual can be open without creating additional risk.
I believe that platforms and marketplaces will create the advantages needed to change the industry providing more value. The trailblazers will create the transparency and the new marketplace will simplify the experiences.
Are you willing to blaze the trail? Are you a Marco Polo, perhaps Lewis or Clark, maybe Columbus, or perhaps Zeng He?
Be inspired, share your experiences with others, change the world!
Ron Berger - Former COO at Fleet