To hear Freightos CEO Ruthie Amaru tell it, her company has put a lot of time and effort into creating an entire payments ecosystem around freight workflows — but somebody had to do it.
With buyers and sellers in every country on the planet, buying in yuan, selling in dollars, trucking in a third currency and having to do that all in a highly regulated way, these entrenched complexities are one reason why the freight business has lagged in the digital innovation department.
“So, we’ve created a kind of billing system that fits the freight lifecycle,” Amaru told PYMNTS’ Karen Webster. “We’ve had to work very hard to figure out how to do the back-to-back invoicing. A lot of our IP has to do with figuring out how to do that in a way that’s safe and trusted and regulated.”
That hard work of creating its payments ecosystem has allowed Freightos to position itself as a vital cog in the wider world of B2B commerce. The company has just announced a new integration with Supermelon, a B2B cross-border sourcing platform for private label U.S. importers.
“If you’re going to identify a manufacturer somewhere in the world, and you don’t know how much it costs to ship their goods to you, that’s a lot of uncertainty,” Amaru said. “So, plugging in our platform, which provides certainty on freight, gives you a guaranteed price. The ability to know that you can actually ship it, plugged into the ability to find and source manufacturers around the world, suddenly it gets to be very powerful.”
Amaru said the partnership will help Supermelon to become a more transactional B2B platform. At present, it’s more of an informational catalog where buyers can find sellers and, many times, go off together and close deals away from that forum.
Fixing Freight…
To be sure, the world of freight is fraught with issues, but Freightos sees an opportunity to fix it by embedding more transparency into the three key elements that make shipping tick: pricing, capacity and availability.
Freightos has transformed a world that was until recently only focused on discovery and sourcing. The company’s embedded freight application programming interfaces (APIs) have reshaped shipping marketplaces to enable sales with full transparency into how much things cost.
Amaru said there’s a lot of interest in this kind of transparency because a lot of people are getting very fed up with the way freight currently works. At present, there’s no transparency at all, she said. Large companies, for example, will typically use their greater buying power to negotiate cheaper rates with a shipping line for a full 12 months, leaving smaller players sitting on the sidelines.
“If you have that buying power, you get a lower rate, but if you don’t have it, then you don’t get that,” Amaru said. “So, there’s been a lot of demand for more transparency, for people to see the different options and understand why they’re getting the price they’re getting.”
Freightos has responded to this need, using its embedded APIs to create a single booking platform that allows shipping firms to bring their supply, including their container capacity and their air cargo capacity, onto the open market where they can sell it to the highest bidder. It’s a simple idea that ensures everyone can compete, Amaru said. And not only that, but it will also allow others to come in and offer their capacity at a lower price, disrupting the market in ways that weren’t possible before.
Prying Open B2B Commerce
“There’s a yearning to create these ready-to-ship goods,” she said. “If it’s cardboard boxes, you can compare whether to source it from Vietnam or South America or Africa or wherever. But you need to see the fully loaded costs of the goods, freight and customs. Those three things together will be what opens up B2B commerce.”
Shipping freight around the world is a tricky business at the best of times. Add in container availability, rates in a constant state of flux, random delays, customs fees and an intricate web of payments layered on top, and things really get complicated and hard to price.
And since COVID-19, she said, container supplies have dried up, and shipping rates have gone through the roof.
“COVID-19 is working very well in favor of container companies,” Amaru said, noting how prices have risen from an average of $3,000 per container last year to around $17,000 now.
“Shipping companies are making a lot of money, and they have very little incentive to fix it all.”
Amaru said the sky-high prices for containers are being driven by demand from the U.S., which sources most of its goods from China. Businesses in the U.S. have shown greater willingness to pay the higher prices, resulting in a log jam that’s left other countries behind.
See also: Veem, Freightos Collaborate On Digital Payments For Global Freight
“Everybody’s sending whatever they can to China and the U.S. because that’s where they’re making the most money,” she said. “So, you have a shortage of containers coming into Tel Aviv because they’re all busy on the China-U.S. route.”
As far as incentivizing shipping companies, Amaru pointed out that most don’t own the ships they operate; they simply manage someone else’s ship, so there’s room for disruption.
Read more: Freightos.com Grows B2B Platform For eCommerce Logistics
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