Digital Transformation

AI’s role in the digital transformation of BCOs and Freight forwarders

Growing role of AI in the International Logistics and Supply Chain industry

The adoption of technology in the supply chain and logistics industry has gained momentum in recent years. While the broader supply chain and transportation sectors have traditionally relied on manual processes and paper-based documentation, a growing number of players are leveraging AI-powered technological solutions to automate supply chains.

The initial reluctance to incorporate technology is waning, replaced by a growing acceptance of logtech software, as the benefits thereof become apparent.

The COVID-induced supply chain disruptions and mobility restrictions made virtual working and collaboration a necessity and compelled forwarders and BCOs to expend resources and efforts on digitization and automation, leading to the rapid adoption of software solutions.

Recent advances in AI and ML provided impetus to this trend, by enabling systems to handle even complex processes and ingest unstructured data, eliminating a factor which had thus far been a hindrance in the mass adoption of technology in logistics and supply chain.

As the sophistication of AI-powered software renders it increasingly capable of handling supply chain planning and logistical activities, Beneficial Cargo Owners (BCOs) and freight forwarders are now cognizant that is a source of competitive advantage.

In a manner, AI is reshaping supply chains, with some of the biggest BCOs using AI to prevent supply chain disruptions and optimize logistics.  

Primary players in International Trade: BCOs and Freight Forwarders

Other than transportation service providers (shipping lines), the two most prominent parties in international trade are BCOs and freight forwarders. While BCOs are the customers who drive demand for transportation services, freight forwarders are intermediaries who play a key role in ensuring the smooth movement of goods.

Freight forwarders offer a wide range of services, ranging from customs clearance and inland transport at both ends (which would include pre-carriage and in-carriage, warehousing, and storage) to more value-added services such as packaging, palletization, documentation, and coordinating with the shipping company for the transport of goods. Global freight forwarders with large volumes go a step further and act as NVOCCs, whereunder they enter into contracts with shipping lines directly and then act as a transport provider as well.

BCOs and freight forwarders share a symbiotic relationship, wherein the freight forwarder efficiently handles logistics activities, offering innovative solutions and expertise, thus allowing BCOs to focus on their core business of manufacturing and expanding in overseas markets.

Given the interdependence between BCOs and freight forwarders and how intertwined their businesses are, it is necessary that information flows and the exchange of data be smooth and timely.

Differing requirements and expectations from Logtech solutions

While both BCOs and freight forwarders have benefitted from using AI-powered technology, the differing nature of businesses and scope of activities means that even though the common objective is to optimize supply chain planning and execution, there is a divergence of focus on certain key aspects, which are explained below:

a) Operational Workflow:

While BCOs need systems that can help them manage the complexities of supply chain planning and scheduling, including aspects such as inventory management, cargo visibility, and warehousing, Forwarders will primarily rely on functionalities that help them navigate the transport and logistics activities for multiple clients simultaneously, while providing personal attention to each client’s shipments. Additionally, given their role as an intermediary, Forwarders also need to ensure collation and submission of data and documentation, while ensuring that all relevant information is shared with concerned parties.

b) Regulatory Landscape:

Given the onerous regulatory requirements and multiple jurisdictions involved in international trade, compliance therewith can pose challenges, with even inadvertent errors exposing the non-compliant party to the risk of penalties and monetary fines.

BCOs need to adhere to laws regulating their industry, the manufacturing sector, and the export of goods. These laws cover rules regarding the country of origin, avoid dealings with sanctioned entities or trading with embargoed countries, and documentary requirements at the origin and destination countries.

As experts in the logistics business, Forwarders need to be cognizant of all regulations governing international transport, Customs requirements, and documentary formalities. Forwarders are expected to guide BCOs to prevent procedural lapses and also complete all legal formalities and customs clearance tasks.

c) Data Management and Integration:

Since most industries other than logistics and transport have already made progress in terms of incorporating technology in their daily operations, it is quite conceivable that BCOs will have implemented various systems covering specific functions, wherefore their priority while selecting a logtech solution would be to ensure that AI is seamlessly integrated into their existing systems.

Freight forwarders, on the other hand, handle similar tasks for multiple clients, wherefore they require AI solutions that are robust and scalable, capable of efficient data integration and interoperability. Forwarders would likely evaluate software on parameters like data ingestion, automating documentation and timely alerts on various milestones, shipment status visibility, and reducing human effort.

KlearNow: The preferred Technology Partner for BCOs and Freight Forwarders alike

In a market saturated with logtech solutions of differing scales and functionalities, KlearNow has emerged as a market leader in its own right.

As one of the pioneers in the field of logtech, KlearNow’s bespoke AI-powered solutions have helped several BCOs and forwarders streamline their supply chains and automate operations. A testimonial from one of our satisfied customers can be viewed here.  

KlearNow’s wide repertoire of products offers scalable solutions to both BCOs and forwarders, aimed at resolving challenges unique to the segment.

Products such as CUSTOMS ENGINE and KlearHub360 greatly simplify documentation and customs clearance tasks, besides providing comprehensive visibility and robust reporting functionalities that enable faster and more insightful decision-making.

Contact KlearNow.AI today to discover how our advanced AI technologies can transform your business. 

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