Forwarding in a pandemic: damage is frightful but the safest path forward is clear

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In offices across Europe, dispatchers were still reliant on whiteboards, post-its, and paper documents as recently as 8 weeks ago. Then a random pathogen gave Europe a crash course in e-commerce, digitization, and remote working. Staff at all levels of forwarders were forcibly shaken from their status quo. That limbering up of their mental models is needed to prepare for the coming competition over a much-reduced market. Operating efficiency that seemed impossible in good times may be the table stakes in hard ones.

Forwarders survived the first lockdown period through cash reserves or a lucky customer portfolio. In the next phase, ingenuity, not just financial stamina, will be needed. While many leaders might turn their attention to top-line and therefore sales, it’s their dispatch that decides their survival. Dispatch is their largest overhead expense and it directly determines the gross margin via buying rates. 

Yet the virus exposed the weakness of staffing a core function with tech sceptics. Old school dispatch behaviours are now a serious risk to forwarders. For example, the idea that a dispatcher “knows who to contact” among carriers due to their years of experience. If that ever was true it certainly isn’t so now: typical carrier routes and the territorial coverage is changing daily. Dispatcher intuition on rates has also always been suspect. Without data and statistical tools, how would a dispatcher know what buying rate is possible? Dispatchers have always made poor analysts, and now that weakness is paramount.

The alternative to this old-boys model was clear even before the pandemic. All of the top forwarders in Europe have been exploring automating key dispatch decisions. These included advanced software to route & group loads, predict price, profile carriers, and organise tendering. Most forwarders do not consider a completely automated dispatching office credible, even where desirable. But, without exaggeration, every step towards this goal lifts the forwarder’s profitability. 

Yet most dispatch teams entered this crisis handicapped by their years of resisting change. The dispatch team themselves never volunteered to let experimental software replace their jobs, and executives let opportunities to modernize pass them by out of fear of upsetting the staff. The reality of pandemic is changing both sides’ minds. Dispatchers have woken to the fact they can lose their job if the company doesn’t suddenly leap in its performance. Leadership has its backbone reinforced by the real life-or-death struggle they will face.

In summary, the damage to the trucking sector is frightful but the safest path forward is clear. With dispatch at its core, it is vital for leaders to embrace what technology can offer: practical AI to group loads, predict price, profile carriers, and organize tendering. Experiment, run pilots with multiple providers, don’t expect easy wins. But trust that the dispatch process can be shaken deeper than just taking away the whiteboard and post-it. 

Photo: Pixabay