The performance of some activities in the digital environment has become inherent to the current scenario in which we live, which includes freight negotiation, because it is possible to idealize a whole historical database to generate statistics and, as a consequence, perform a secure freight contracting within the company’s requirements.
Source: https://www.freepik.com/free-photo/close-up-view-online-shopping-concept_9461033.htm#query=frete%20digital&position=4&from_view=search&track=ais
Undeniably, Covid-19 brought major impacts to international shipping, first with the interruption of production processes and logistics activity, initially in China and, then, other countries were also partially or completely paralyzing their activities.
As a result, this has generated even greater bottlenecks for the movement of goods from the supply chain worldwide. Let’s look at the case of the maritime modal in which most of the movement is made with containers – certain ports did not have the equipment and / or availability of spaces on the ships.
And the situation in Brazil was aggravated, because according to the National Confederation of Industry (CNI):
“The country accounts for only 1% of containers moved globally and is off major shipping routes, which are comparatively shorter and with more options for stopovers and weekly services.”
CNI complements by stating that the prices recorded for the China-Brazil route in January 2022 was 5.7 times higher than that recorded in the same period in 2020, resulting in a value of USD11,150.00.
Challenges of freight negotiation in Brazil
The great challenge in the routine of the foreign trade professional is to manage the activities in an agile way. This is because, when it arrives in the negotiation and quotation part of international freight, it is compared with processes that are purely manual, repetitive and that prevent it from performing analytical actions that bring strategic results to the company.
When performing the activities manually, in addition to losing traceability of the quotation process, it is no longer inferred statistical data that can optimize operations. Because the convergence of operations and these statistical data allow indexes and indicators to be generated, taking into account the metrics defined in strategic planning.
In addition to transit time, considering that most Brazilian imports come from China, there are also bureaucratic issues for the release of goods and return of equipment – so that it can enter into circulation again through the export process.
For the next few years there will still be a challenge regarding supply and demand, since with the pandemic all flows have been changed. Fact is that shipowners seek the most profitable routes, and this is an aspect that can also boost the negotiation of digital freight.
Thus, although the scarcity of space and equipment is still prolonged and the price of freight does not return to pre-pandemic levels, nor will those peaks hit in the pandemic period.
Scenario 2022
International logistics is a complex global system that includes freight and warehousing, as well as transportation and coordination systems, being one of the most important industries in the world.
In other words, its complexity is increased by external aspects of the world, since the demand is repressed by numerous factors and this generates bottlenecks whose normalization occurs only from the medium term. The following are some events that have changed or have been changing the world order:
- Ship stranded in the Suez Canal;
- Pandemic of Covid-19;
- War in Ukraine.
It is also worth noting the tension between China and Taiwan, which could further affect trade and international logistics.
Source: https://www.freepik.com/free-photo/man-with-helmet-working-warehouse_13450101.htm#query=log%C3%ADstica&position=4&from_view=search&track=sph
The scenario for 2022 that involves the negotiation of digital freight, according to the ANTAQ study analyzing the lack of equipment and the availability of spaces in the maritime modal, would be:
- Scale omissions (observed in 90% of terminals);
- Rollover of cargo (delay in loading the cargo on ships);
- Lack of containers;
- Increased freight;
- Congestion in terminals;
- Cancellation of boarding/disembarkation;
- Suspension of routes/stopovers;
- Changes to rules and undue charges of overtime;
- Selectivity of users;
- Change of delivery times.
The importance of investing in technology to negotiate freight
Industry 5.0 investments aim to combine human capital with technology, especially in the negotiation of digital freight. This integration is seen as a differential in maintaining efficiency to occupy economic protagonism, even in uncertain and volatile times.
We infer that there are marginal gains beyond the way of performing the work, because:
- the possibility of generating opportunities is open;
- changes the way an activity is performed;
- creates demands; and
- modifies and/or updates customer service.
Freight trading technology automates quotes and meets these market requirements, as well as supports managers to:
- analyze various scenarios;
- check how profitability is affected by external factors;
- position the company in the current scenario in the market.
How does digital freight negotiation work?
To carry out the negotiation of international freight in a digital way the company will need to approve its supplier base, because it is carried out from these current partners. This ensures agility and security to the process while serving compliance.
Source: https://www.freepik.com/free-photo/close-up-hands-pointing-tablet_2104771.htm#query=fretes%20digital&position=19&from_view=search&track=ais
It is also worth mentioning that, basically, there are two modalities for quotation of freight:
- Spot – When the company has no volume or regularity or both, and carries out the quotations per shipment in a unique way;
- IDB – In this case, the company has regularity and, in case it does not need to make individual quotations, it does a pricing process. From there, you will choose the one that best suits your needs and will be valid for a predetermined period of time. Here it is interesting to note that before the Covid-19 pandemic, the validity was usually 6 months to 1 year. However, market volatility has required a much longer term – there are cases on the market with a validity of 15 days.
Learn about Cheap2Ship’s freight trading platform
Technology has been transforming the way business is done, especially when we realize the evolution of the means of payment that originated in the barter and arrived, in the 21st century, with people making payments by mobile phone.
In this evolution, the constant use and updating of technologies help in the optimization of processes and in the agile service of customers, generating value and a competitive differential through innovation.
To achieve this agility of service there is a need to consolidate information in order to reduce complexity, maintaining a digital alignment and presenting diversified solutions.
In this sense Cheap2Ship has been revolutionizing the negotiation process of international freight since 2017, ensuring a more organized and 100% digital process, from quotation to service contracting.
Come and discover how our platform presents all your trades in the same environment, generating agility, practicality and reduction of operating costs.
