Empowering Forwarders with AI: Improving Profits Margins and EBIT

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For years, technology has been cast as a threat to freight forwarders. At Solvo.ai, we believe the opposite is true: far from a threat, technology—in particular AI—will deepen the quality of the work freight forwarders do, empowering them with new tools and freeing up their time to deal with aspects of their jobs that really matter.

To explore this optimistic perspective, we gathered insights from two Freight Forwarding veterans, each bringing unique insights and extensive experience. Despite the diversity of our backgrounds, we all hit on major areas regarding how AI will empower freight forwarders going forward. Below, you’ll find perspectives from myself and: 

• Sune Stilling, ex-Founder and Managing Partner at Maersk Growth now building the first supply chain and logistics focused venture fund in Europe, Nine Realms
• Will Urban, a Freight industry veteran, who after a prolonged career with Expeditors, grew Flexport from $600m to $4.5bn revenue in his capacity as Chief Revenue Officer

This conversation is far from over. In fact it’s just the beginning. Reach out to let us to know how you see AI impacting freight forwarding—and where you think this exciting and dynamic field is headed - Gaurav Bajaj, CEO, Solvo.ai  

At the end of the day, what matters most in this industry is margin with an average EBIT of 2 - 4%. As Sune puts it: “The industry is nothing like 20 years ago where nobody knew what anybody was paying. Today, shippers have a pretty good indication of the shipping rates based on indices such as FBX. So, as a forwarder, you need to find creative ways to improve margins.

For Solvo.ai, the dynamic nature of pricing freight presents its own unique set of opportunities. 

Pricing Is really a black box for forwarders. While it is largely based on aggregate market information, each forwarder is unique—they’re different sizes, based in disparate locations and pursue wildly different business strategies. What Solvo.ai is doing is using technology to empower forwarders with an ability to create a tailored pricing strategy that caters to customer behavior and expectations.

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Over his 30 year Freight Forwarding career, Will has learned just how important pricing is in an industry that runs on thousands of static rule-based processes. “How do you connect the strategy in the boardroom to the sales execution on the ground? That’s the million dollar question. There’s always been a big disconnect in that sense and implementing AI that helps marry those two together is the path to improving the bottom line.”

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In Conclusion

Forwarders I speak with regularly share their need to have better oversight and control. Many forwarders expanded at such a pace that decentralization and country-managed P&Ls was the norm. We’re in a new era, though. One where the customer demands transparency and zero-headache shipping. This has forced forwarders to re-evaluate the customer approach and the technology stack that helps them deliver. Ultimately, if they can’t control their first point of engagement (the rate they offer, the speed it’s delivered at and the margins they make), they’ll struggle to be seen as a customer-centric provider or survive in volatile markets. That first engagement sets the tone for the entire relationship and it’s one forwarders can’t afford to get wrong. 

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Those predicting technology as a threat to the industry are missing the point. It’s about the evolution of a forwarder, combining human expertise with AI insights that will deliver forwarder 2.0: one with operational efficiencies, retained customers, and improved margins.

What do you think? Let’s have a conversation.

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