Freight Forwarding – Addressing the Challenges

The role and the functions of a freight forwarder have evolved with time. Traditionally, a freight forwarder was just a link between the goods owner and the carrier. The primary job was to assist the goods owner to transport goods to their destination. In recent years, the word ‘assisting’ has been replaced by ‘undertaking’.

A modern day freight forwarder ‘undertakes’ to get goods transported from one place to another. Undertaking includes all the processes involved in transit of goods like arranging the means of transport, arranging all types of documentation needed for the goods from their origin to their destination.

The business freight transportation is gaining grounds across the world with the increasing volumes of international trade.

Experts predict a rise of 10 per cent or more in the annual revenue growth. But each industry has its ups and downs due to shifting demand patterns and evolving customer base. The biggest challenge looming is to ‘stick on’ by offering competitive prices to new customers from developing countries. Relationship with the shippers is also undergoing phenomenal change and the switching costs are no longer relevant. To address these challenges and ensure long time survival the professional need to understand the industry dynamics and adopt strategies accordingly.

Size does matter, even in this industry. Large freight forwarders can procure better rates from carriers as they have capacity to book in advance. They are deemed to get preferential treatment from carriers. Fixed costs reduce due to increasing size. It is best to expand business by focusing on a region and a particular industry. This way you gain expertise for a particular region or an industry that ultimately translates into higher profits. This way they outdo their rivals who serve all regions equally and gain advantage in acquiring new business.

It is always wise to club ‘Freight Forwarding’ with ‘Custom Clearance’ in a single package for the customers. A shipper is more interested in a company which offers both. Statistics reveal that customers have longer relationships with providers who bundle up these two services. This also opens up avenues for new business opportunities.

Last but not the least, it is very important to develop a customer and sales oriented approach. For any service industry, this is the key to win and expand business relationships. Two customer service attributes that the shippers demand from their freight forwarders are a single point of contact so that they can get in touch with whenever they need to and the speed in resolving issues.

Major market challenges faced by the freight forwarders seem daunting. To become the best-in-class it is important that these logistics service providers start thinking and performing outside the box.

Written by