Interesting story in The Loadstar today about Singapore based startup Cargobase. Although this company is addressing a niche market in the Logistics Industry; ad-hoc freight, actual costs to shippers and the sheer size of the overall market they are tackling seems to justify their proposition. Some comments on the Loadstar story get a bit defensive; Cargobase is commoditizing the work of forwarders. To me, that’s exactly why they found the right proposition.

Many forwarders and express service providers charge significant premiums to their ad-hoc freight requests, on board couriers and other non-planned shipment requests.   The justification of high margins is that it takes the service provider quite some work to execute, since the chance of repetition of the order is low so money has to be made on this one transaction and since competition will be minimal due to the urgency at the customer’s side. Lastly, many of the forwarders and couriers pass on the actual execution to expert companies they engage and simply add their margins.

With speed as the key driver for the order, limited transparancy on the supply supply side and customers with no pre-agreed rate in their ERP system, compliance can become an issue and will lead to a lot of adminstrative work on the procurement team of the shipper. Why was the selected provider chosen? Were  alternatives considered? How many providers quoted?

The proposition of Cargobase and potentially others that have stepped in this niche market is that they found a technology cum knowledge based solution that disrupts the traditional ways of working and deals with the issues discussed above; More transparancy, fast turnaround of a couple of quotes, reducing cost and diminishing compliance concerns. To me that is the essence of what innovative (e-) platforms should bring. The logistics industry traditionally has not been on the forefront of innovation but some of the recent propositions startups have brought should be embraced and tested rather than seen as the enemy that will commoditize the industry…cause else they will.