Supply chain finance: Digital freight forwarding is on the move

The potential of services that combine trade finance and freight services has been understood for some time.

In a 2018 report, Boston Consulting Group estimated venture capitalists had poured more than $3.3 billion into digital shipping and logistics start-ups between 2012 and 2017, and suggested that digital freight forwarders would inevitably expand their offerings to connect to other service offerings along the logistics value chain.

In June, UK-based digital freight forwarder Beacon announced it had raised more than $15 million in its Series A fundraising round.

The company believes its ability to offer supply chain finance alongside freight forwarding will allow customers to better control and manage their cash flow – suppliers often demand payment before goods are shipped and, with months-long shipment times, importers need flexible finance to meet their working capital needs.


Fraser Robinson,

“By working with customers to solve their working capital constraint problems, we can provide a simpler and more complete solution that is also more interesting economically,” says CEO Fraser Robinson.

“Providing both shipping and financing services enables us to pool our profits to ensure prices on the freight side are competitive.”

Lack of working capital and liquidity is one of the biggest growth challenges for businesses, says Richard Fattal, co-founder of Zencargo.

“Freight forwarders are well placed to service this need given their proximity to data on manufacturing, order fulfilment, customs and inventory,” he says.

“By leveraging in-depth insights into the customer’s freight movements and product performance, forwarders can quickly and accurately price risk and open up the market to more businesses.”


Digital freight forwarders bring together insights from the extended supply chain, tracking products all the way from order through manufacturing to transport and delivery, creating a connected system of supply and demand information.

This enables businesses to improve efficiency by tracking metrics such as product lead time, manufacturer performance and load fill, making data-backed choices about supplier performance, carrier choice and stock consolidation to reduce their costs.

In addition, tracking the end-to-end product journey creates a more complete inventory view so planners can make real-time decisions about where stock is needed most, reducing stock-outs and lost revenue.

Those businesses with in-depth supply chain visibility have been able to adapt more effectively to disruption 

 – Richard Fattal, Zencargo

Digital forwarders can also provide accurate information over carbon footprint, sourcing and processes to help businesses make proactive decisions to align their values and their supply chain.

So why has it taken so long for customers to realise the benefits of digitizing freight services?


Philipp Ortwein,

According to InstaFreight co-founder & managing director Philipp Ortwein, the concept has had to wait for the technology to catch up.

“Demand for digital innovation has increased sharply over the last five years, but traditional forwarding companies are often stuck with legacy systems and do not have the structures and capabilities to implement digital processes and interfaces,” he says.

“This has opened up the space for start-ups to execute digital logistics models.”

Beacon’s Robinson observes that as e-commerce has gained a greater share of revenue in traditional businesses, so too has interest in service providers that can deliver insights, integrated solutions and, ultimately, near-real-time customer service.

Supply chains are complex networks made up of hundreds of stakeholders, many of which will be using their own systems to manage work and processes. For many legacy businesses, the prospect of bringing all these enterprises onto one system has seemed to be more trouble that it was worth.

In contrast, newer businesses have been more willing to embrace digital-first strategies.

Zencargo’s Fattal believes Covid-19 lockdown measures will likely accelerate the shift to digital freight forwarding.

“Those businesses with in-depth supply chain visibility have been able to adapt more effectively to disruption, navigating and reacting to changes in demand, supply and transport conditions faster than those working off manual systems,” he says.

Freightos Group CMO Eytan Buchman

As far back as 2015, industry research indicated that nearly 40{a87f602f9b65d268d2531d6307ed39cfde24e475374069973d0be7fc923da513} of shippers were dissatisfied with their third-party logistics partner’s technological capacities, adds Freightos Group CMO Eytan Buchman.

“The industry has resisted transitioning from an offline, opaque environment to a transparent, digital one, but this is changing, and the transition has gained further momentum during the coronavirus crisis,” he says.

Buchman acknowledges that shifting online requires a leap of faith, but also that B2B buying decisions are more likely to start with Google now rather than consulting agencies.

“Finally, we are seeing more top-tier companies – from Maersk to Kuehne+Nagel – move online, further leading the market,” he says.

Four years ago, none of the global forwarders covered in Freightos Group’s annual freight survey could provide instant online freight quotes. Now almost half of the top 20 forwarders have this facility and the company predicts that every logistics provider will be digital by the end of this decade.

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