Artificial intelligence is increasingly making an impact on business, with logistics and supply chain being no exception. However, will the use of large language models and other forms of AI really have a devastating impact on the freight forwarding sector?
According to a new report by CargoON, titled ‘Artificial Intelligence in the Supply Chain: opportunity or risk?,’ the key human aspects of freight forwarding means that AI will not decimate the industry.
AI’s ability to mitigate empty runs
One of the findings of the report was that AI is proving an effective tool when it comes to freight forwarding and load planning, as the technology has the ability to process vastly more data than human operators.
One of the experts quoted on this subject in the report is Artur Olejniczak, a lecturer at the University of Logistics in Poznań.
In his opinion, there is simply a stark contrast here between human and AI capabilities:
“An energetic forwarder can process 20–30 orders a day, while artificial intelligence can search for a thousand quotes in an hour. Assuming, of course, that it is fed the right dose of data.” says Olejniczak.
However, Olejniczak emphasises the necessity for data sharing to fully harness AI’s potential.
“AI algorithms can already increase the efficiency of logistics operations, reduce the number of empty runs, and thus also reduce the problem of driver shortages. However, in order to take full advantage of the possibilities of AI, organisations need to open up, share their data and resources, for example when organising transport.”
Why the human element of freight forwarding shall remain pivotal
Another finding in the report is that AI algorithms are revolutionising customer service in freight exchanges, with the potential to match carriers and shippers more efficiently.
On the other hand, despite concerns about AI rendering freight forwarders redundant, the report states that some industry insiders believe the human element remains indispensable.
One example is Paweł Ziaja, End to End Product Area Leader at Trans.eu Group, who has highlighted the importance of human judgement in freight forwarding.
When asked by the authors of the CargoON report if AI would cause a mass collapse of forwarding companies, Ziaja simply replied “I don’t think so,” before going on to add the following:
“We must not forget the human dimension of this job. Choosing a carrier and negotiating the rate is only part of the freight forwarder’s job. In practice, they solve dozens of other problems every day. From the most banal, when the driver has a flat tire and can’t communicate in German. To be more serious, when an accident occurs, the driver is hospitalised and the carrier seeks support from a freight forwarder.”
Furthermore, Ziaja stressed that the inherent business risks in freight forwarding necessitate human judgement and trust:
“Preparing an offer is one thing, but taking a business risk is another. For example, I can prepare an order for a carrier from Germany to Spain or the United Kingdom, but I’m not sure if I’ll manage to find something on the way back. That is, we take on some risk together. We also often make a deal based on trust in the other person, because we agreed on something for the next order.”
Ziaja’s comments were somewhat echoed in the report by Anna Majowicz from the Polish Road Transport Institute (PITD), who believes that the rise of AI will generate growth in the market for soft skills:
“Artificial intelligence is able to optimise a number of processes, but it is worth noting that it will not take over the need for human-to-human relationships. Every technological development over the centuries has reduced some jobs while creating new ones. In my opinion, AI will increase the space for soft skills, and as a result, a niche for specialists in interpersonal relations may emerge.”
Will AI solutions be out of reach for SMEs?
Another area covered in the report is the costs associated with implementing AI algorithms, which some believe pose a challenge for smaller transport and forwarding companies.
However, Majowicz believes that there are cost-effective solutions for SMEs to take advantage of:
“I don’t think that AI will exclude small transport or forwarding companies from the market. Although the implementation of advanced AI-based solutions may require significant financial outlays, there are also solutions that are within the financial reach of smaller carriers or forwarders. Note that many companies offer subscription-based or cloud-based models, which may be more accessible to smaller enterprises,” she explains.