Blockchain Is Disrupting Freight Cost Management Sector in Europe
Small to medium enterprises (SMEs) across Europe are digitising their time-consuming invoice verification and claims management processes. A recent analysis by Frost & Sullivan reveals that owing to this development, the region’s freight cost management (FCM) market is poised to register a CAGR of 17.4%, with gross market revenues predicted to rise from €484 million in 2018 to approximately €1.49 billion by 2025.
“So far, there has been a lack of transparency and ineffective communication between shippers and carriers in the end-to-end supply chain process,” said Krishna Chaithanya Bathala, Industry Analyst, Automotive & Transportation at Frost & Sullivan. “However, with the emergence of freight cost management solutions powered by digital technologies, the shippers’ capability in data warehousing and benchmarking carriers’ performance has been enhanced.”
Frost & Sullivan’s latest study, European Freight Cost Management Market, Forecast to 2025, provides a comprehensive outlook on the overall freight cost management market in Europe. The research offers a detailed analysis of the current market scenario and provides strategic observations and meaningful insights for companies that want to venture or expand into this sector.
While the FCM market is dominated by legacy participants such as SAP, Oracle, and JDA, which hold a combined market share of about 55%, it will still remain attractive for niche participants like the Alpega Group, Eyefreight, AEB, and LOCOM. Their cost-competitiveness, adherence to changing requirements, capability to offer personalised services, and new business models are better suited to the needs of SMEs, offering significant room for the penetration of FCM tools.
“Going forward, agility, cost, and speed will be the top three determining factors for vendor selection in the FCM service market,” noted Suriya Anjumohan, Industry Analyst, Automotive & Transportation at Frost & Sullivan. “Service personalisation and the ability to quickly attend to change requests from customers will help in gaining a competitive advantage in the industry.”
Companies operating in the FCM market should explore the growth opportunities in:
- Partnering with niche companies rather than legacy participants, which will facilitate easy onboarding of SMEs due to their highly cost-competitive offerings.
- Developing or acquiring blockchain capabilities with smart contracts solutions, which will increase transparency in freight audits, secured payments, and record management.
- Offering increased process automation capabilities, which enable companies to improve cost efficiencies by allowing for electronic submission, processing, and clearance of invoices from carriers.
- Deploying artificial intelligence and data analytics to support effective freight risk management and freight cost analysis.