Why Freight Digitization Stalls, and What Procurement Must Fix Freight forwarders have made substantial progress in digitizing their operational workflows. Most large organizations now operate with a modern TMS, an RMS of some kind, visibility platforms, and a set of automated processes that span few areas of quoting, booking, and documentation.
However, procurement and pricing leaders continue to face familiar challenges: rate files circulating in spreadsheets, inconsistent contract interpretation, fragmented workflows across regions, and decisions that slow down during market volatility.
Digitization has expanded system coverage,
Below, we outline the structural issues behind the stagnation and the actions procurement teams can take to move toward a more resilient, intelligence-driven operating model.
The Gap Between Digitized Workflows and Decision Intelligence Most digitization initiatives focus on execution viz quoting, booking, compliance, and documentation.
The functions responsible for protecting margin: procurement, pricing, network planning, remain heavily dependent on:
Locally stored rate files Region-specific templates Manual reconciliation Knowledge concentrated in individuals Tools that were not designed for volatile markets As markets have become more fluid and contract structures more complex, this model no longer scales but becomes a single point of failure.
The Cost of Disconnection: Poor data quality, the inevitable outcome of fragmented systems, is not a soft cost. Gartner estimates that poor data quality costs organizations an average of $12.9 million annually [1] .
The result is a widening gap between the speed of the market and the speed of internal decision-making .
Why Forwarders Stall After Initial Digitization Procurement teams consistently report three structural blockers:
1. Procurement and Pricing Do Not Work From the Same Data Foundation Procurement manages long-term ocean and air contracts, surcharges, incentives, and carrier relationships.
In most organizations, these functions operate with different versions of rate sheets and different interpretations of contractual terms.
The outcome is predictable: contracts negotiated at competitive levels do not consistently appear in customer-facing quotes.
This disconnect is a major source of silent margin erosion.
2. Rate Management Still Depends on Manual Data Quality Rate management systems were designed for static environments.
In today’s climate, procurement teams spend significant time:
Validating carrier inputs Normalizing formats Reconciling freight, surcharges, and accessorials Updating multiple systems Reviewing inconsistencies between regions This is not an operational inconvenience.
3. Spreadsheets Fill the Gaps Left by Existing Systems Excel is often described as a “temporary workaround,” but in reality, it has become the de facto rate management system for many forwarders.
The reasons are clear:
Tools lack flexibility Rate ingestion is inconsistent Each region needs customized views Stakeholders need immediate responses But spreadsheets introduce errors, version conflicts, and delays.
The Leadership Shift: From Gut → Governance → Intelligence The 3-stage Maturity Model
Stage Description The Next Step for CXOs
I. Gut-Based Decisions rely on individual expertise and local knowledge.
Stabilize: Capture and codify tacit experience.
II. Governed Data is standardized and shared, but remains fragmented across the enterprise. (The Current Trap)
Unify: Create single-version visibility and accountability across functions.
III. Intelligent Systems learn from transactions, detect anomalies, and augment human judgment with predictive actions.
Orchestrate: Institutionalize continuous improvement and scale human expertise.
Where Most Enterprise Freight Forwarders Are Stuck? Most forwarders are stuck in:
Stage II : Governed, but Fragmented They have invested in:
But decisions are still slow because systems cannot connect judgment across the enterprise.
This is amplified by talent challenges:
ageing workforce high turnover institutional knowledge leaking away Why the TMS Cannot Solve the Intelligence Gap Many large organizations believe their advanced TMS is the answer. However, the TMS is fundamentally a system of record, designed for transactional execution, documentation, and compliance.
It is built to house the data, but not to orchestrate decisions across fragmented data sources or to apply the prescriptive intelligence needed for Stage III.
Relying on your TMS to perform the deep-cross functional rate validation and predictive modeling required for margin protection is attempting to make a transaction engine do the work of a dedicated decision intelligence layer.
At its core, this is a capability transformation that centers on empowering the expert.
Freight leaders must build systems that scale human judgment without diluting it.
The Four Pillars of Orchestration: Freight leaders can accelerate this transformation by focusing on four interdependent enablers that restore control to the procurement function. We call these the Four Pillars of Orchestration (4PO) :
Pillar 1: A Centralized, Structured Contract Repository
Procurement must own the master rate repository, not just the paper contract. Every contract, surcharge, and negotiated VIP(volume incentive plans) must exist within a governed, structured repository.
Pillar 2: Automated Normalization and Reconciliation
The future belongs to platforms that use AI/ML to automate data ingestion and reconciliation, freeing the expert from the transactional 80% to focus on the strategic 20%—negotiation, analysis, and exception handling.
Pillar 3: Real-Time Alignment Across Procurement, Pricing, and Sales
Decision quality improves exponentially when Procurement, Pricing, and Sales share a single version of truth. When Procurement wins a better rate, the system must ensure the Sales team knows about it immediately.
Pillar 4:Continuous Learning From Quotes, Tenders, and Bookings
Each quote, tender, and booking must feed back into the system, enabling analysis of success patterns and margin health. Effective digital transformation in procurement leads to direct cost reductions of 5% to 15% in logistics costs [3] , immediately strengthening net margins.
The Path Forward for Procurement & Pricing Leaders The freight market will remain volatile.
Forwarders who invest in AI-first rate management will gain:
Higher contract utilization Faster pricing cycles Reduced margin leakage Better alignment across functions Stronger resilience during market shifts Those that remain dependent on fragmented tools and spreadsheets will struggle to maintain competitiveness.
Digitization alone is not the end goal.
Footnotes and Sources
[1] Gartner: The Cost of Poor Data Quality: https://www.gartner.com/en/articles/the-cost-of-poor-data-quality
[2] McKinsey & Company:https://www.mckinsey.com/capabilities/operations/our-insights/reimagining-the-back-office-with-gen-ai
[3] McKinsey & Company:https://www.mckinsey.com/industries/industrials-and-electronics/our-insights/distribution-blog/harnessing-the-power-of-ai-in-distribution-operations
Frequently Asked Questions
Q: What is data-driven decision-making in freight forwarding?
It’s the process of using centralized, structured data and AI insights to drive procurement, pricing, and quoting decisions across global teams.
Q: Why is it difficult for freight forwarders to become data-driven?
Because most use legacy TMS systems and Excel workarounds that trap information in silos, making collaboration and transparency difficult.
Q: What is decision intelligence in logistics?
Decision intelligence connects data, people, and AI systems to continuously learn from transactions—transforming experience into scalable foresight.
Q: How does AI improve freight pricing and procurement?
AI learns from historical contracts, quotes, and bookings to suggest optimal pricing, detect anomalies, and improve margin consistency.
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