While fragmentation is a common factor across all freight forwarding systems, company management seldom plans for it to show up in operations. And yet, every stakeholder within a company’s ranks recognizes fragmentation as a problem. The sales team quotes out of one system, the operations team books the same shipment into a second system, and the finance team reconciles both in yet another system, while compliance chases paperwork across all three.

In this kind of setup, every handoff becomes an opportunity to lose data or slow down a process the customer expected to complete hours earlier. Running multiple disconnected systems in any freight forwarding operation has a real cost, but it often goes unnoticed because of a “this is how we work” mentality.

“The cost of running disconnected systems hides inside something worse than a budget line. It hides inside ‘how we work.’”

Where the Time Actually Goes

Entering the same data multiple times is an expensive habit. Take the average freight forwarding operation. A shipment begins in a quote generation tool, its details are entered into the operations platform, and once again into the finance system. In some cases, customs documentation even lives in a fourth system.

Each handoff could take up to 15 minutes, depending on the data and the person doing it. If a freight forwarder processes about 500 shipments across those disconnected systems, that is about 2,000 manual data entries each and every month, at a minimum.

The sheer volume alone will inevitably eat into productive time for the staff doing this work. And in far too many cases, the people rekeying this data are senior operations coordinators, finance officers, and compliance professionals who have to spend most of their day doing tasks a connected system would handle easily. It is a waste of talent. But even if you hire new low-level staff to handle it, it still adds salary costs, plus a learning curve and typos or mistakes that give the reconciliation team another layer of issues to sort through.

What Fragmentation Costs Beyond the Labor

Labor costs show up once you know where to find them. But downstream costs can be trickier to identify. Quote turnaround times slow because the rates live in one system and the customers credit history lives in another. That means someone has to constantly check both systems before issuing the quote. 

Invoicing is also delayed because the finance team has to ensure it captures actual operational costs, which they don’t have access to until operations transfers that information. Because it isn’t their priority, it happens only when someone eventually gets around to it. In this kind of scenario, you can see how payment cycles inevitably extend, even when, on paper, they shouldn't.

However, that is not the worst of it, because month-end close is when the cumulative cost of fragmented processes becomes apparent. At this point, the finance department realizes that numbers from the same shipment don’t agree across systems, possibly due to human error, differing exchange rates or charge codes, or missing line items that surfaced after shipment delivery. An international or multi-currency freight company operating three separate platforms, with no communication between them, may spend several days at month-end trying to reconcile what occurred with what is recorded. 

Beyond these problems that arise directly from the lack of communication between multiple freight forwarding software systems, many errors are generated at each handoff and go undetected. For example, an incorrect charge code entered into an operations system carries over to an invoice. It often goes unnoticed until the customer calls to dispute it or an audit identifies it. By that time, correcting the error costs much more than the original entry ever would. Add the damage to trust between the customer and your company, and you can see why fragmentation can be an expensive habit.

The Question Forwarders Keep Postponing

Many forwarding companies recognize that their systems are incompatible with one another, and they also recognize that incompatibility comes at a cost. But many remain isolated because they face inherent resistance when trying to integrate different systems. For example, migrating to new systems will be difficult for many organizations because it causes disruption, training takes months, and they believe there is always some level of risk involved. 

That means that until the costs of integrating systems are outweighed by the costs of continuing to bridge them manually (i.e., rekeying data, manually resolving discrepancies), most forwarding organizations will continue using workarounds to accomplish this task. The thing is, the math eventually flips, especially in the tech-heavy world we live in. And if you don’t, your competitors will, giving them an advantage. 

NewageNXT was designed to remove these handoffs. Developed as a single system, the platform lets customers enter data in one place and have that same information flow through sales, operations, accounting/finance, compliance, and customer service without re-entering it anywhere. With NewageNXT, a quote easily converts into a booking, and that booking turns into an invoice. Depending on the country, the system can automatically file those invoices with the tax authorities. 

All multi-currency receipts reconcile automatically, and when a foreign currency conversion occurs (i.e., they have to convert from dollars to euros), the exchange-rate difference posts instantly. Using NewageNXT means you don’t need a spreadsheet to bridge the gap between the operational information your company has collected and the financial data your accounting team sees. 

“Every handoff eliminated is time recovered. In an industry where net margins run 3 to 5%, time is the thinnest resource a forwarder has.”

Ultimately, for most growing forwarders, the issue is how long the profit margin can absorb the costs of not consolidating these different systems. And this time frame is shrinking rapidly. Get a demo today to see how NewageNXT can help.