LONG BEACH, CALIFORNIA: The traditional freight forwarding model is being upended by fast developing supply chain technology, with forwarders, online startups, and even carriers in a race to develop integrated end-to-end solutions that not everyone can win.
Addressing TPM 2018 in a keynote address, DB Schenker CEO Jochen Thewes said technology is changing the game completely and he described an environment in which the traditional business model of forwarders was under threat.
“For the startups, the race is on. Who will come out on top will depend on whether digital forwarders will be able to build up logistics knowhow and fulfilment capabilities faster than we can build up our digital competence and digital process execution,” he said.
“The days when 3PLs [third-party logistics providers] did everything on their own and in their own systems, those days are over. The days when we took years to develop and rollout global transport management systems and visibility and data solutions are over. The speed that you need today to bring new solutions to the market simply does not allow for it anymore.”
As if the online solutions providers were not competition enough, carriers getting involved in landslide operations and even offering such services as customs declaration was also beginning to blur the line between container line and forwarder. Thewes said Maersk’s plan to become an integrator of global container logistics could be a game changer.
“Having access to the assets and having access to their capacity and controlling their terminals is a crucial part,” he said. “The business model that we used to operate — 100 percent outsourced with little control and order fulfilment of the supply chain — is going to be challenged tremendously by this development.
“We really need to consider how we are going to position ourselves if that happens in the future if we are to really have any differentiating factors for our customers. It’s going to be a real challenge.”
But the Hamburg-based executive was confident DB Schenker would prevail in any race for supply chain superiority.
“A large company like DB Schenker may not be the fastest sprinter, but over the long distance we are a pretty strong contender. We are fully in this and fully committed to the race and coming up in one of the top spots.”
In his keynote address, Thewes referred the insulation of the shipping and logistics industry from technological disruption seen elsewhere in the economy, something that could no longer be avoided.
“We have been shielded for quite some time from really radical change and disruption. That time is up,” he said.
“If global forwarders such as DB Schenker want to remain relevant, if we want to stay at the forefront of our industry, if we want to compete in this environment and win the future talent that we need for that, the transformation that we as an industry have ahead of us is absolutely massive.”
Thewes acknowledged that the DB Schenker strategy was too narrow for such a fast changing world and a wider lens was needed to understand what was going on. So in a crystal ball exercise, DB Schenker spent six months talking to business leaders, universities, companies that were disrupted and reinvented themselves, and companies that were disrupted and did not make it, and talked to non-governmental organizations and the military.
What emerged were a set of 10 strategic beliefs that have been incorporated into DB Schenker’s strategy. “Even though we cannot with certainty predict what our operating model will look like in five or 10 years, what we can do at best is to formulate things about the future and that we believe to be true and will have an impact on our business,” he said.