Former SVP at Kuehne + Nagel Co Ltd
- Customer decision-making criteria when assessing freight forwarders
- Forto’s product set and value proposition
- Threat of legacy players shifting into the digital segment
- Key digital freight forwarding trends and Forto’s competitive outlook
Could you start by highlighting the sweet spot of customers for a business such as Forto?
How should we frame Forto’s typical customer size? You referenced customers that are multi-products, multi-order, multi-vendors and average-to-high complexity. Are Forto’s customers typically small-to-mid-size businesses that lack sophisticated supply-chain software and need to partner with a digital forwarder?
Which key criteria underpin customer decision-making? What do businesses care about when assessing freight forwarders, and has the emergence of digital forwarders changed the decision-making processes?
How would you weight the key decision-making criteria of price, service and digital requirements? Is price always the most important – so it’s 50% price, 25% service and 25% digital – or is it one-third apiece?
Pricing is still the key focus, but if a digital player can offer higher-quality data and fulfil the digital requirements, a customer may be more flexible on the price. Is that a fair summary?
What is the highest cost element for customers? Is it the price itself, or the back-end systems? If the pricing is slightly higher for digital freight forwarders because they lack the scale, are the back-end cost savings more compelling for a customer than the price, or is price always the most important cost element?
Can you pinpoint Forto’s pricing differentiation or weaknesses across routes? Where is it strong vs weak?
Will Forto only be priced similarly to other freight forwarders on the China to Germany route and the sea freight side, or is the company’s pricing comparable to others across the board?
What are your expectations for Forto beyond the China to Germany route? What happens in other geographies? Can the company service these itself, or would it have to rely on partners given its lower scale?
How would you rank Forto against its rivals on the first- and last-mile component?
Are customers increasingly focusing on first- and last-mile mile as higher value-add? Does that potentially disadvantage Forto, or is the core freight process still the key area?
Where is Forto stronger or weaker than its peers in services and digital requirements?
Would you say Forto’s technology and data is fundamentally better than a player such as Flexport or even the incumbent freight forwarders? Presumably, you’d just be analysing data for the China to Germany route.
In which additional or value-added services can Forto differentiate from other players, whether across its customs clearance, buyer’s consolidation, order management, insurance or pre- and on-carriage?
Do you think being a digital logistics freight forwarder is a long-term differentiator? What are the traditional players doing?
How much more advanced are the tech and data for digital forwarders relative to legacy providers? It sounds as if the maximum gap for technological innovation in freight forwarding is 6-12 months ahead of competitors. Does Forto essentially have a 12-month head start, or is that progressively decreasing?
Which areas do you think players such as Forto should focus on developing, given it seems very difficult to gain durable points of differentiation in this industry?
Would you ultimately suggest there’s an issue of the digital players trying to focus on too many things?
Where is the position of strength among legacy freight forwarders vs more digital players? My sense is you think it’s the legacy players. They’ve got scale, pricing and service, and it’s just building out that digital aspect to bolster the offering. Players such as Forto have the data, but they only have the scale and pricing on very niche routes, and it’s harder to gain scale than for traditional players to move into digital.
Would you advise a company such as Forto against trying to gain the global scale of the main players and to continue focusing on very specific routes? It can have similar pricing and try to allow its data to win the deal, rather than trying to become the next Kuehne + Nagel.
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