Marketplaces have long been an avenue for sales transactions. Historically, markets provide a physical space for vendors to display their goods for sale. These commerce venues often provide consumers with opportunities to negotiate prices and secure a fair market rate when purchasing local produce, foods, and textiles. Similarly, online marketplaces provide a digital venue for buyers and sellers to interact directly but on a larger global scale. Online marketplaces have opened the door for sales of not only physical goods but services as well. People can purchase everything from vacations and car insurance to electronics and eyeglasses online at the click of a button.
But how does this work in a shipping container marketplace? How is an online freight marketplace different from a freight forwarder? And does a freight marketplace actually offer value? Read on for details of what defines an online freight marketplace and how they benefit shippers and carrier partners.
What is a Freight Marketplace?
In basic terms, an online marketplace is a solution that directly connects buyers and sellers. More specifically, an online freight marketplace connects buyers in need of ocean container capacity (shippers and importers) to the sellers of that capacity (freight forwarders, NVOCCs, and ship lines). A freight marketplace aggregates available LCL and FCL capacity from various providers into a single platform, allowing shippers and importers to quickly search and secure the space they need in real time. This simplifies the process for both carriers with capacity and the shippers with freight, creating a more efficient and streamlined supply chain while mitigating redundancy in communications and decreasing overall freight costs.
Top 8 Reasons to Use a Freight Marketplace for Container Capacity Procurement
- Faster Quotes: RFQs for ocean freight are notoriously tedious, requiring emails back and forth with carriers, and often include waiting days before receiving a verified quote. In contrast, online freight marketplaces provide options in minutes — shippers simply enter the trade lane, ready date, commodity details, and required services to find carriers with confirmed capacity. Shippers can compare ETDs, transit times, and pricing in one place and select the option that fits their needs and budget. Simply and quickly.
- Transparent Pricing: traditional online freight quoting services generally rely on historical data and current market conditions to predict freight costs on a trade lane, mark up those rates with margin to make it securely profitable, and present sell rates to the shipper accordingly. This model assumes the capacity will be available at a given rate, but does not guarantee it. In contrast, an online freight marketplace compiles and presents verified available capacity at a confirmed rate for a specific sailing to provide accurate pricing to shippers. There is no guessing at market rates, no buffer in hidden margins — a true shipping container marketplace provides real-time capacity and confirmed rates, allowing shippers to confidently book space and keep products moving.
- Uncover Hidden Capacity: an additional benefit of utilizing a freight marketplace is the ability to uncover “hidden capacity” — carriers with unexpected availability from cancelled orders or production shortages. Often this space opens up unexpectedly and with little notice; carriers offer the space to container marketplaces in an attempt to fill it from a wider shipper pool and maximize profits on the sailing. This benefits both carriers and shippers (particularly small-to-medium size businesses that do not have contracted pricing with carriers) and ultimately creates a more efficient and streamlined global supply chain.
- Lower Freight Rates: as carriers look to fill last-minute available capacity, often they do so at discounted rates. After all, making some profit on the space is better than making none if it sails empty. This capacity in an online freight marketplace provides unique opportunities for shippers and importers in specific circumstances:
- Backlogged freight: product that is ready-to-ship and has been delayed due to carrier schedules, rolled sailings, etc.
- Spot freight: infrequent shipments, particularly those that are low-value and highly dependent on affordable freight costs.
- Less-than-container (LCL) shipments: supply chain disruptions have not been limited to container shipments, as LCL providers are also reliant on sailing schedules and rates from huge ship lines. LCL rates and availability fluctuate based on current bookings, trade lane volumes, and unexpected capacity — a container marketplace can provide access to a wide range of providers, service levels, and costs for smaller shipments.
- Diversified Carrier Network: there are more than 5,000 NVOCCs and 100,000 freight forwarding companies in the U.S. alone (yes, really). These companies often have partnerships with various overseas agents and offer niche services based on commodity or trade lanes, but this is far more than a single shipper or importer could onboard and manage independently. A freight marketplace provides the ability to diversify a shipper’s carrier network easily, while mitigating associated risks. An online freight marketplace absorbs the responsibility of vetting carriers to ensure shippers can move freight confidently and offers a single point-of-contact to manage various carriers and shipments.
- Access Integrated Trade Finance: as shippers and importers know, there is a lot of working capital tied up in international shipments. Most overseas suppliers require that the product be paid for, at least in part, before delivery at the final destination. Considering the extended transit times that plague current transportation systems, this means money is tied up longer — limiting the ability for small-to-medium businesses to scale and grow while freight sits in ships offshore. Trade finance provides a solution and frees up cash flow so companies can continue growing their teams and their businesses.
- Simplify Customs Clearance: customs processes can be confusing and tedious, particularly for new or infrequent shippers and importers. Managed freight marketplaces, like FreightMango, provide optional services to handle customs filings on a client’s behalf. Services include monitoring ETAs, submitting accurate documentation, and making payments for clearance, duties, and taxes. This assistance frees up time and offers peace of mind that shipments won’t be delayed or held up at the border.
- Digitize Processes: while there have been many advancements in the ocean freight industry, it remains fragmented in terms of documentation. Consider how much communication is happening between shipper, origin agent, carrier, freight forwarder, customs agent, destination agent, and consignee. Just like the childhood game of “Telephone,” much can be lost or missed between parties. Managed freight marketplaces limit miscommunications by mediating between shippers and vendors to ensure a smooth, seamless transaction. Shippers and importers connect directly with FreightMango operators, and FreightMango operators communicate directly to all other parties — streamlining and simplifying processes.
Specific benefits of digitization include:
- Reduced errors: fewer points of contact mean fewer opportunities for mistakes and miscommunication.
- Access to documentation: online freight marketplaces provide a single source for monitoring mandatory documents. BOLs, packing lists, customs filings — all uploaded to an online platform for easy access and reference.
- Live tracking: check a shipment’s status in real time with integrated digital tracking — as FreightMango has done using Vizion’s API services.
- Simple invoicing and payment: freight marketplaces make it easier for shippers and importers to pay for freight costs by consolidating charges from vendors (carriers, forwarders, origin and destination agents, etc.) into a single transaction.
BONUS: How Carriers & Forwarders Benefit from a Freight Marketplace Partnership
While digital freight marketplaces offer substantial benefits to buyers in the freight capacity transaction (shippers and importers), suppliers (forwarders, NVOCCs, carriers) have much to gain as well. A digital platform also functions as an online shipping marketplace for freight forwarders and offers a wide range of benefits:
- Ability to control costs and adjust rates according to shifts in the market. Freight marketplaces allow suppliers to upload and update available capacity and valid rates in real time - rather than requiring pricing commitments that may not be realistic should the market change suddenly (as we witnessed in the recent shipping container crisis).
- Access to a larger, more diverse pool of shippers and importers fills space in LCL containers and FCL vessels. This is particularly beneficial for filling unexpected, last-minute capacity.
- Quicker, more manageable payment terms and simple invoicing. A container marketplace manages the invoicing process and collects from all customers , making it easy to access a broad customer base while lowering associated risks.
Online freight marketplaces are designed to simplify the ocean container shipping process, by instantly connecting shippers and importers to the capacity they need. Marketplaces offer transparent, competitive pricing and help mitigate any unexpected surcharges and fees. On the backend, shippers and importers receive professional, digitized support and management throughout the transaction - helping them navigate the nuances of documentation requirements and customs processes. This model also serves as an online shipping marketplace for freight forwarders - providing them with an opportunity to fill available container space quickly by expanding their potential customer base. Freight marketplaces are a win-win for both shippers and carriers Contact FreightMango today to learn more about how a partnership can benefit your business!