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Sailing Smoothly: Confronting an...

Sailing Smoothly: Confronting and Conquering Freight Forwarding Challenges in 2024

Sailing Smoothly: Confronting and Conquering Freight Forwarding Challenges in 2024

The recent years have posed significant challenges for freight forwarders, especially in the aftermath of the global pandemic, where disruptions have become more pervasive owing to several factors. Whether stemming from diminishing demand amidst economic uncertainties, geopolitical tensions, labour shortages, climate variations, port disturbances, or other influencing variables, freight forwarders are compelled to proactively navigate these complexities to survive and thrive in their business endeavours.

The recent years have posed significant challenges for freight forwarders, especially in the aftermath of the global pandemic, where disruptions have become more pervasive owing to several factors. Whether stemming from diminishing demand amidst economic uncertainties, geopolitical tensions, labour shortages, climate variations, port disturbances, or other influencing variables, freight forwarders are compelled to proactively navigate these complexities to survive and thrive in their business endeavours.

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05.12.2023
Sailing Smoothly: Confronting and Conquering Freight Forwarding Challenges in 2024

Key Challenges Confronting Freight Forwarders in 2024

Dwindling Demand:

Economic uncertainties, marked by inflation and potential recessions, significantly influence buying behaviours and freight demand, presenting challenges for forwarders striving to maintain operational balance.

In 2023, overcapacity and reduced demand posed challenges, impacting freight forwarders. Leading forwarder Kuehne+Nagel reported a 41% drop in net turnover. Likewise, when disclosing their financial performance for Q3 2023, major shipping lines uniformly documented sharp year-on-year revenue drops.

Escalating Operational Costs:

From labour shortages to geopolitical tensions exemplified by events such as Russia’s invasion of Ukraine and the China-Taiwan tension, the movement of goods within specific regions faces disruption, amplifying associated costs. The Panama Canal drought in 2023 demonstrated how climate change can impact supply chains, leading to increased shipping costs.

Intensified Competition:

Smaller forwarders face increased competition as digital newcomers and major industry players make substantial tech investments. This dynamic prompts mergers or closures, requiring strategic adaptations for survival in a rapidly evolving market threatened by pricing pressures and the risk of commoditization.

Regulatory Transformations:

Freight forwarders grapple with evolving regulations, particularly concerning carbon emissions and reporting, adding complexity to the industry’s operational landscape.

Fluctuating Customer Loyalty:

Shifting customer loyalty requires forwarders to emphasise exceptional customer service and value-added offerings. Simultaneously, a focus on operational efficiency becomes crucial for maximising profitability.

Real-Time Transportation Visibility as a Game-Changer

An increasing number of freight forwarders acknowledge the pivotal role of technology and automation in attaining real-time visibility into cargo movements. The importance of consistent communication and timely updates for end customers has been recognised well. Under the circumstances, real-time transportation visibility for freight forwarders emerges as a transformative solution, effectively addressing many challenges freight forwarders encounter. These platforms offer a comprehensive overview of the entire supply chain and provide granular information about each node. The dividends of such visibility extend to end customers by providing real-time tracking for shipments.

Crucially, freight forwarders are awakening to the reality that those who lag will face escalating difficulties in keeping pace with the rapid changes and meeting evolving customer expectations.

Now, let’s delve into three key areas freight forwarders can focus on using real-time transportation visibility.

1. Reducing Operating Costs

Real-time container tracking is crucial for reducing operating costs for freight forwarders as it provides a comprehensive overview of pending tasks. In addition, container milestones from the port terminals help bridge information gaps in cargo transfers. Real-time updates on container milestones and alerts for potential delays empower freight forwarders to make informed decisions, proactively addressing bottlenecks at transhipment hubs.

For instance, detecting the risk of a customer’s container being rolled over to a later vessel due to space constraints allows freight forwarders to swiftly engage with carriers and terminals, prioritise the container, and ensure it is placed on the intended vessel, preventing rollovers and preserving delivery schedules. Freight forwarders can leverage real-time container tracking to:

  • Consolidate shipments
  • Switch vessels in the face of potential disruptions
  • Minimise bottlenecks at transhipment ports
  • Minimise penalties such as demurrage and detention charges.

2. Customer Retention Strategies

Real-time visibility technology equips freight forwarders to ensure the following for their customers:

  • Avoid reliance on email communications
  • Offer an accessible and efficient means for customers to track their cargo status
  • Proactive communication about cargo status, timely alerts regarding potential delays
  • Faster resolutions for shipments facing possible deviations.

3. Expanding Business

Leveraging real-time visibility goes beyond its initial goal of enhancing tracking; it provides the means to delve into historical trends, enabling the optimisation of shipping processes. This optimisation is crucial for freight forwarders, allowing streamlined processes that lead to the execution of a higher volume of shipments for shippers, ultimately minimising significant delays. This fosters customer loyalty and acts as a catalyst for business expansion.

For instance, freight forwarders can use analytics as a catalyst for business growth by examining carrier performance to identify the most reliable carriers (carrier performance analytics). They can also identify less-risky trade routes (lane analytics) and delve into average demurrage spend, offering valuable insights into costs associated with delays and storage charges (spend analytics). The benefits of such analyses help:

  • Diversifying the existing customer base
  • Expanding into new markets
  • Efficiently managing higher volumes while reducing operating costs for enhanced profitability.

Live Example: A Forwarder Benefiting through Enhanced Visibility

A leading player in the European freight forwarding sector, faced a formidable challenge in delivering live container tracking and real-time updates to their customers, particularly those heavily reliant on ocean freight. The company grappled with the inefficiency of depending on carrier websites for information, leading to a labour-intensive process of daily checks across multiple platforms. This reactive approach resulted in extended cargo dwell times, triggering substantial demurrage and detention fees, ultimately escalating costs and dissatisfaction among customers.

 

In a strategic move in April 2022, the freight forwarder addressed these challenges by implementing Portcast real-time container tracking and Predictive ETA solutions through seamless API integration. The impact was transformative, allowing the company to create user-friendly dashboards and offer real-time tracking directly to end customers. The result was significant time and cost savings, with approximately 3,000 hours saved in customer inquiries and tracking updates.

Leveraging Predictive ETA, the company prioritised shipments, reducing container rollovers and minimising detention and demurrage charges, positively impacting operational costs. The newfound reliability strengthened customer loyalty, liberating customer-facing teams to focus on understanding customer needs rather than being consumed by shipment tracking. As the company eyes global expansion, Portcast predictive ETAs provide valuable insights, positioning them for success in crucial international business hubs. With nearly five decades of industry expertise and digital innovations, this fusion uniquely positions the freight forwarding company for continued global expansion and success.

Final Thoughts

In the dynamic landscape of modern freight forwarding, the imperative for reliable and actionable data has never been more pronounced. Shippers today demand real-time insights to track their product movements, pinpoint supply chain bottlenecks, and mitigate avoidable costs such as demurrage and detention. The diminishing tolerance for late deliveries underscores the critical need for operational efficiency. As we navigate the ever-evolving terrain of global logistics, the transformative power of real-time visibility becomes increasingly evident in meeting customer expectations, fostering operational resilience and securing a competitive edge in the freight forwarding industry.

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