Geodis Embarks on the Digital Highway

Geodis may well be fully owned by the French railway company SNCF, its air cargo business brings in about 50 to 60% of the revenue of the Freight Forwarding division. Accommodating the shippers’ growing need for on-line applications is high on the agenda, says Executive VP Kim Pedersen.

Executive Vice President Kim Pedersen  -  photo: ms
Executive Vice President Kim Pedersen - photo: ms

Geodis has put three specific products on the market, says Kim, while speaking with  CargoForwarder Global at the Air Cargo Europe fair in Munich. “There is our premium service Air Fast, guaranteeing immediate departure, then we have Air Save, in which we consolidate and finally Air Flex, offering a combination of different carriers. The majority of our business comes from the Fast and Save.”

To support this, Geodis has its own ULDs and has entered into its own block space agreements. Even if Kim thinks that the voice of the shipper should be taken more into consideration, his personal experience has taught him that the majority of them leave the final decision on carrier selection to Geodis. “It really depends on the maturity of the shipper in this respect,” he says. “Our choice is based on our product concept of stability, confidence and lead times.”

Impressive buying power
The days of airline companies going for a direct approach to the shipper bypassing the forwarders are gone, he says. “There is less and less demand by the shippers to include the airlines in the negotiations. When it happens, it has to do with very specific movements and products, such as perishables or project cargo. The shippers are aware of the fact that we can offer our own products all over the world, thanks to SNCF, which has invested a lot in our network.”
A chain of acquisitions over the last 10 years, including Wilson (the former TNT Freight Management) and lately OHL in the US, has provided Geodis with an ever-growing buying power towards the airlines. “Thanks to this, we can build these operating corridors”, says Kim.
Kim is convinced that this system allows Geodis to compete with the integrators. “They are attractive to shippers of parcels below 30 kg. If their needs are above that window, they will likely turn to us forwarders. Of course there is a tendency of integrators trying to attract business above the 30 kg and of forwarders going for the less than 30 kg, but above the 30 kg the integrator is more expensive.”

Man at work at Geodis warehouse
Man at work at Geodis warehouse

Added value
There is also the added value Geodis can offer, with order management as only one example, he claims. “Integrators offer, in fact, mail and postal services.” But if there is one thing that has been changing the environment, it is e-commerce, but in this segment too, the forwarder has a role to play.
Kim: “We can take several parcels from 1 shipper. Suppose a shipper in the UK wants to send 40 parcels a day to Australia. We consolidate them and we are able to deliver them. This is cheaper than giving each parcel to the integrator. From the moment the shipment is large enough, the forwarder steps in.”
That is why the Alibabas and Amazons of this world have stepped up. The fact that the latter is setting up its own logistic system is not a matter of great concern to Kim. “They are doing this with a focus on the U.S., but I do not see them doing this all over the world.”

Digitalise or die
Saying ‘e-commerce ‘is also saying ‘returns’. “We have always discussions on the returns, which should be controlled by the e-commerce companies themselves. Should they, however, decide that the product is not valuable enough for re-shipment we can either sell it or scrap it on their behalf.”
Apart from e-commerce, digitalisation is setting the tune, Kim remarks. “If you are a Chinese shipper and you want to book a 20 ft container, you might just as well bypass Geodis and book it yourself online. You can see this as a threat, but this system is not mature yet and behind the scene there is always a freight forwarder coming in. After all, you still need someone to pick it up, take it to the port and perform customs clearance.”

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Seamless solutions
Nevertheless Kim thinks it is imperative for freight forwarders to build seamless solutions, as Geodis did. “We have a full origin to destination to which we are adding a price engine calculator. We expect to launch it in Q3 of this year, both for air and sea. We are the first forwarder in the world to add this to the system. Global shippers are getting more and more used to booking on-line. Today they already have the quotes, but on-line shopping in freight forwarding is gaining pace. We want to accommodate shippers who wish to do that.”
Especially China and South-East Asia are much advanced in this respect, Kim knows. “The big freight forwarders have to be on top of this if we want to remain in the industry.
The new millennials are setting a new theme in the air cargo industry, concludes Kim. “The air cargo industry is still very old-fashioned when it comes to paperwork. We see a steep upward curve towards digitalisation on the shipper’s side, but so far not at the air cargo industry’s.”

Marcel Schoeters in Brussels

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