A Winning Formula for Freight Forwarding

In a changing world, we all share in a global learning experience.

The future is a popular place these days.

Everybody wants to know what it looks like. Everybody wants to know the best way to prepare for it. Everybody wants to know how to get there first and with the right stuff.

But getting it right has never been more difficult. Or as Yoda told Luke Skywalker, “Difficult to see. Always in motion is the future.”

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Emerging economies are challenging the advanced ones by creating new markets but adding competitors.

Our worlds are being rocked by the same forces: new technologies, new competitors, new economies, new consumers, new politics and new expectations in the value we create for our customers.

Playing this new game according to our old rules, experiences and assumptions is like playing checkers on a chessboard. When the board is three-dimensional, the rules change with every move, and new players can join at any time.

A time of paradox

Our view of the future is clouded by a time of paradox.

Emerging economies are challenging the advanced ones, creating new markets but adding new local competitors.

A billion people have joined the global middle class, with a billion more on the way, improving quality of life but putting tremendous stress on global resources.

Humanity is packing up and moving to cities, concentrating wealth and simplifying access – but posing huge challenges to quality of life.

Take a step closer to our businesses, and we see the same kind of change. Along with the macro changes, both ports and freight forwarding are navigating transformation in the ocean carrier industry.

Coming off years of increasing volatility and financial losses, we’re seeing massive consolidation and a concentration of market shares. Consolidation means less volatility, but it also means fewer competitors.

The next battleground

Experience is the next competitive battleground. It is the ultimate measure of everything we do.

We dug deep into research on the state of customer experience in the freight forwarding industry. We saw that we had to create a more powerful and intentional relationship with customers.

We needed to get a whole lot better at seeing experience through their eyes.

We needed to start building long-term partnerships as soon as we started new relationships, with the same time and attention we put into connections with long-time partners.

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Success will be measured by interactions with customers and high-quality experiences.

We formed a customer experience team. They’ve been charged with giving us new tools and procedures to modernize and simplify our processes.

The measure of the team’s success will be better interactions with customers and the ability to provide the high-quality experiences they expect. There are few places where creating the right experience is more important, high-stakes and complex than retail.

That’s true for UPS. And true for ocean shipping in general.

We need disruption

Disruption is a bad thing if somebody does it to you. It’s a very good thing if you do it to yourself.

Self-disruption can be very hard for big organizations, especially successful ones. Why change when we’re winning?

It’s very easy for a large and successful company to see the world from the perspective of your own history, experience and success.

For most of us, we’re usually at our worst when we’re convinced we’re at our best. We have to look at disruption from two perspectives.

One is circuits and code. The second is organizations that can use amazing new tools to rethink how they work and the experience they create.

We have tools we could not even imagine a decade ago. Machines can connect, learn and make decisions. They can be so small that you need a microscope to see them.

The Internet of Things will allow even the smallest businesses to connect to global networks. By 2020, 40 to 50 billion devices will be connected to these networks.

Smart sensors by the hundreds of millions can monitor, calculate and connect, giving us the kind of real-time data that has been beyond our reach in the past. And they will do that to the level of a single package.

Blockchain technologies will give us secure global spreadsheets that live in the cloud and are available at every point in our network. 3D printing will revolutionize the interaction between manufacturing and distribution.

We’re working with SAP and 3D-printing company Fast Radius to build a 3D-printing network in our UPS stores and a 3D-printing factory at our global hub in Louisville where we have printers running 24-7.

We’re not talking teleportation here. These advances are real. They are now. They are growing. And they will drive change at a rate the world has never seen.

With Fast Radius, UPS can create on-demand products. 

Smarter logistics

The heart of our technology and the engine of our customer experience is our Smart Logistics Network.

It’s everything we are: trucks to planes to facilities to algorithms, including the experience, brains and energy of our people.

Smart means going from intelligent to intuitive. We’re building a network that can think, plan and change and improve our capabilities – and the customer experience.

It’s a network that makes international trade as seamless as local trade.

We used to say that we were a company of assets supported by technology. Now we say we’re a technology company that operates assets.

But disruption is more than buying the best technologies. That also means creating an organization that can make the most of those technologies to change the customer experience.

Look at UPS, and you see a company with a long history of adapting to change.

That started in our earliest days when our founder, Jim Casey, saw his thriving messenger business disrupted by the telephone.

It continued with building a fleet of cars and trucks with the arrival of the common carrier era.

These are linear changes: each advance becoming a platform for the next one.

Linear change built a global company. But as we rounded the turn into the 21st century, we realized linear progress no longer thinks big enough, widely enough or moves fast enough.

The next risk

We realized that the future winners would not get there on just the strength of their assets. Our real risk is from software we don’t even know about yet. Our next competitor is likely to be a genius in a dorm room.

In a fast-forward world, we realized that if you wait for customers to tell you what they need, it’s already too late.

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Partnership failure rates are as high as 70 percent.

We have to be able to see around the corners. We have to already have the solutions in place by the time it’s clear the customer needs them.

We can build the largest, fastest, most customer-centric network in the world. But inevitably it reaches the train yards, airports and ocean ports of our enablers.

We all have to be part of the same network. We need to combine our assets, your technology and our view of the future in new and better ways.

Our capabilities and technologies have to come together around the customer. Nobody can go it alone. We all need help.

Partnership is one of those warm and fuzzy words we like to throw around in business. Everybody wants it. Nobody disagrees with it. Most of us underestimate what it takes to truly achieve it.

The reality is that partnerships are hard – hard to create and even harder to maintain.

Do some quick research into strategic alliances and business partnerships, and you see failure rates as high as 70 percent.

Beating those odds takes a shared vision. It takes structure. It takes understanding what each partner brings to the table. It takes a clarity of expectations.

The same horizon

The port of the future and the future of freight forwarding share the same horizon.

We win or lose on our ability to change the customer experience, making it faster, better and more flexible. We win or lose on the power of the technologies we bring to that experience.

And we win or lose on the strength of the partnerships that forge diverse networks into a seamless network that extends deep into the value chains of our customers.

It’s said that the future belongs to those who try it, poke at it, question it and turn it inside out.

We need to try, poke, question and turn it in ways that we haven’t been particularly good at in the past.

In a changing world, we all share in a global learning experience. Class is in session every minute of every day.

And one thing is truer than ever. The future does not grade on a curve.

This article was adapted from Cindy Miller’s keynote address at the American Association of Port Authorities Annual Convention in Long Beach, California.

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The Route to the Future

Cindy Miller President, Global Freight Forwarding at UPS.

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