Demand for logistics procurement software is increasing dramatically in 2021

Demand for logistics procurement software is increasing dramatically in 2021

The logistics business has been in crisis for well over a year, with no signs of relief in sight as freight prices continue to increase and capacity constraints worsen. Logistics is a somewhat arcane and opaque profession to most people, but it has recently gained public attention as current issues cause significant delays in manufacturing and people’s daily lives.

In this article:

  • The capacity shortage
  • Regional uncertainly of availability
  • The effect on freight rates

ocean-sea-freight-rates-logistics-procurement

Capacity and the effect on shipping rates

Large shipping corporations like Maersk and CMA CGM, two of the world’s largest, gain from the current crisis. Since they control a significant portion of the capacity on the principal supply routes from Asia to North America and Europe. The demand for their services has outpaced the availability of their ships, causing their costs to skyrocket.

freightender-logistics-procurement-softeare

Due to a scarcity of flights during the pandemic, air freight prices had already risen before ocean rates. Next, road networks in some geographies or countries, such as the United States and England, have begun to experience capacity problems, due to increased demand and a lack of drivers. This, of course, has an effect on prices.

The need for digitization in Logistics

Before the pandemic, digitization was a hot subject. But the effort to become digital has really taken off since then. Resulting in a surge in interest in logistics technology in the shipping business. Due to the delays and unpredictability of shipping, visibility has become one of the most important aspects of this profession, as many businesses want to better control their flow of goods.

Project 44 is a company that has had rapid growth in real-time visibility and is a preferred partner of many international corporations.

Logistics digitization and procurement

Despite the fact that logistics procurement is a small part of the logistics tech landscape, it is receiving a lot of attention these days. Traditionally, freight was purchased on a seasonal basis. With only a few occasions per year. One ocean RFQ with a six-month or one-year validity period, two air sourcing events per year at maximum, and perhaps once every two or three years a regional road transportation tender.

Freightender logistics sourcing frachteinkauf

This method has radically changed as a result of pandemic-related delays. A shortage of capacity, significant price rises, and regional uncertainty of availability, and corporations now need to do more smaller events. Many organizations have been completing tenders using Excel, which is quite manual and time-consuming, and are now searching for automation and efficiency in freight service procurement.

As a result, logistics procurement platforms that specialize in optimizing the freight buying process are seeing a significant increase in demand for their services.

“We have seen a phenomenal growth of interest of companies that never considered technology before for freight procurement. Midsize companies that used Excel for many years and only did 1–3 tenders per year now want to digitize this process. That means there is an enormous growth potential for us but also for the niche of logistics procurement as a whole as before it was something mostly only very large companies were interested in.”

Pieter Kinds – CEO Freightender & TendrX.

This article appeared first on: https://log-tech.medium.com/the-demand-for-logistics-procurement-software-skyrockets-539239e8bc2d

More from the Freightender blog

Freightender in the media

TPM21: Good data quality key to freight procurement, allocation


Pieter Kinds

Pieter Kinds

CEO Freightender.com

Freightender is the standard in freight tendering. It makes the tender process lean, smarter and much faster. 
Fully cloud-based. Curious? Request a free live demo and join the Freight Tender Revolution!

Schedule Demo Freight Sourcing

Schedule Demo RFQ Management

Freightender at the Transport & Logistic 2023 in Munich

Freightender, a leading provider of digital freight procurement solutions, is excited to announce its participation in the upcoming Transport & Logistic 2023 exhibition to be held in Munich, Germany. The event, one of the largest trade fairs for logistics and...

Unlock the Secrets of Successful Transport Procurement

When it comes to transportation, it is important for companies to secure the most cost-effective and efficient solutions. One of the most important steps to achieve this is through transport procurement. Transport procurement is the process of sourcing the most...

A holistic approach to logistics procurement, what is that?

Logistics (procurement) has changed in the last couple of years as we all know. The volatility in capacity and pricing is also affecting how companies buy freight. Prices are no longer being kept stable without any change for a year or even two years. This has...

European road transport rates reach record levels

Rates in European road transport are breaking records. This according to the  Road Freight Rate Benchmark study, conducted by industry association IRU, research firm Transport Intelligence (TI) and transport platform Upply for the second quarter of this year....

Ocean freight RFQ: 3 experts tips for professionals in 2022

How can you run a successful freight RFQ? In this ultimate ocean freight procurement guide, we share 3 key topics to get in order before sending your tender: good communication, solid logistics data and dedicated and modern technology (freight procurement platforms)....

Freight Auditing: a critical component of the solution, not just a marketing gimmick.

Auditing invoices in logistics is not sexy, but it offers a key to many challenges. In this article, I dive into this somewhat obscure niche. What is freight auditing? So what is freight auditing? It's simply the conceptual term for various processes performed to...

NVOCC pricing vs Freight Forwarder pricing

Is the distinction between NVOCCs and freight forwarders significant? This is a common question, therefore we decided to investigate it further in the following post. Read on to learn everything there is to know about NVOCCs, including their responsibilities,...

Road freight tenders: postpone due capacity crisis in logistics?

People in shipper organizations wonder if they need to postpone road tenders as there is talk about capacity issues everywhere and apparently carriers don't respond to tenders. The worry is right as the logistics world has changed but of course, you should tender if...

Pricing management in Logistics: Lever with the highest impact on profit

The relevance of profitable freight and logistics pricing strategies is highlighted by the combined effects of increasing industry competitiveness and rising transportation costs. By now the logistics industry is in turmoil for well over a year with no relief in sight...

Tender Management: Why the future is digital

Customers want to acquire freight or negotiate freight rates, so they send out a tender or RFQ to a group of forwarders or carriers who wish to participate in the process. This is straightforward and transparent. The process behind it is less visible and can be found...