Flexport Oceanmatch in the Eyes of a Chinese Freight Forwarder

flexport-oceanmatch-concept

In March 2019, the famous American company FLEXPORT published a blog post on the official website, proposing the concept of OCEANMATCH. For detail, please click here.The article mainly proposes several points, which are summarized as follows:

  1. According to big data, which may refer to US Customs data, only 64.6% of containers were fully utilized. The unused space could have been loaded with goods, thus to save shipping costs.
  2. FLEXPORT has developed OCEANMATCH, a new business that can take advantage of these unused container spaces to save costs for customers. Of course, to make the most of these spaces, the cooperation of the cargo owners is needed with a sacrifice of some days delay. Just like taking a hitchhiking ride, you won’t mind too much longer waiting time if the service is cheaper unless you have to hurry for an interview or other things that cannot be postponed.
  3. OCEANMATCH is given the function of reducing port congestion by FLEXPORT. By rationally utilizing space, the number of containers can be reduced. This logic is right. It can reduce port congestion (Mitigating Congestion).

4.OCEANMATCH can also reduce pollution, the same reason as above. With fewer containers, the shipping company can downsize the capacity of the ships. Consequently, the cost of fuel and other expenditures is decreased, and pollution can also be controlled.

5.FLEXPORT can develop this business of OCEANMATCH through the analysis of US container import and export container data.

As one China freight forwarder company,We believe that this OCEANMATCH solution is very feasible with strong practical data support and high operability. Next, we will interpret one by one, representing only our views and positions based on our many years experience in China freight forwarder industry..

1. Why is only 64.6% of containers fully utilized?

We analyze that there should be several situations.

The first reason is that the exporter’s estimate of the container size or cargo volume is not accurate. For example, 1000 toy cars can be loaded into a 40HQ container (that is 65-68 cubic meters), but in reality, there are still 5-10 cubic meters of space unused after loading. In this case, if there is no extra cargo or the buyer is not allowed to add more, it will result in wasted space.

The second reason may be that the buyer only purchases a fixed amount of goods according to his company’s sales ability or marketing plan. For example, the total volume is only 100 cubic meters. Then it will not be able to fill the container, leaving some space unused.

The third reason is regarding the consolidation of goods. Buyers may buy from different sellers different products to make up the container space. However, there could be an error in the estimation and actual affirmation, which may result in either overload or less load.

2. Advantages of FLEXPORT

FLEXPORT has developed OCEANMATCH based on big data and supply chain. It addresses the core issue of container space wastage. Since space is there, how can it be utilized to serve customers? We believe that FLEXPORT has the following advantages.

1) Strong technical foundation and financial strength

FLEXPORT is known for its digitalization. Recently it has received the investment of Softbank. Capital plus technology can provide OCEANMATCH with the necessary powerful analytical capabilities and operational support.

2) Simple business design of OCEANMATCH

To put it simply, it is to share the container space of the A customer with the B customer to share the cost of the sea freight, so that the resources can be fully utilized. In the traditional international freight forwarding business, there is a similar business called LCL business that the agent provides consolidation service of cargos in small volumes. Goods from different customers are collected at the port of departure, packed, unloaded at the port of destination, and then charged separately for each customer. OCEANMATCH is a derivative of this business, but only through the mutual integration of its own platform customers to achieve the MATCH function.

3) Convenient customer data integration

The clients’ data are integrated into FLEXPORT global trading operating system. This system can easily extract the LCL requirements of potential customers,then match the time and the address of the goods with the assistance of certain marketing strategies. I believe that  OCEANMATCH will see fast development soon.

3. FLEXPORT challenges

1) Resources available to be integrated are limited to the FLEXPORT platform.

From the perspective of the OCEANMATCH program, the resources currently available for integration can only be customers who have booked through the FLEXPORT platform. In other words, only FLEXPORT customers are likely to implement the MATCH function. This data covers not enough. There may be a question mark as to how much demand for MATCH can be generated.

2)Successful completion of MATCH requires FLEXPORT to integrate various services from the ports of departure and destination.

Smoothly combining the customer’s goods and utilizing the wasted container space may require multiple ways to integrate and choose a variety of ways to load the products. For example, if the goods are in the same area (not far away), there are two options: one is for the shipper to send their products to the FLEXPORT warehouse, where FLEXPORT will integrate and ship in full containers. The other is for the truck company to go to the address of different shipping factories to load separately. These require FLEXPORT for additional operations and analysis. It not only allows customers to ship smoothly at a cheaper cost but also must be profitable to FLEXPORT. (Perhaps making money at the moment is not the first concern). Another thing to note is whether different types of goods are suitable for LCL shipment. For example, clothing products and industrial raw materials are impossible to put together in principle. It is neither safe nor acceptable to the customer. This is also a problem that needs to be solved.

3)The balance of efficiency and cost shall be kept.

If the efficiency of delivery is neglected simply to save costs, then the promotion of this service may have big problems. Sometimes it is foolish to save 100-300USD shipping costs and miss the best arrival time. How to keep the balance is also an issue that must be paid attention to.

4)OCEANMATCH shall be promoted to a broader dimension.

I believe that a successful solution must be applied to a larger dimension. In other words, the development of an industry standard should be the most important goal pursued by FLEXPORT. If only applied to FLEXPORT customers, it is just overkill. If promoted to a larger place, so that the majority of shipping companies, airlines, freight forwarders, and cargo owners can participate in the system, it is a good thing.

 

4 Conclusion:

I think this should be the core pursuit of FLEXPORT, and industry rules must be established according to its standards. Amazon’s most profitable is not a shopping site, but Amazon Cloud Products (AWS). Similarly, if FLEXPORT is successful, its mode must be that the program of OCEANMATCH is widely copied to effectively reduce the cost between international trade, and it will charge the system maintenance fee and promotion fee. If this can be done, FLEXPORT will subvert the original international trade and global logistics landscape. From this point of view, OCEANMATCH is only a small landmark event. The international trade platform advocated by FLEXPORT may be the ultimate solution. Flexport experience and test are also very helpful for all China freight forwarders to find our new freight forwarding solutions in the near future.

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