An essential characteristic of freight forwarding is the ability to tackle complex tasks. A forwarding expert always has a plan B and C when plan A doesn’t work out.
In spite of this, times are changing fast, and industries must keep up. In recent years, the challenges faced by non-vessel carrier companies have evolved, and those that adapted managed to succeed.
This article discusses the most significant current challenges facing freight forwarders. For businesses in the UK needing forwarding services, they should know what questions to ask their agents and how these issues affect them.
Ocean freight rates are volatile
Freight forwarders who have worked in the industry for a while understand the complexity of ocean freight rate management. There is almost no factor that determines the rate that is not unstable by definition.
Besides the constant change of service charges and container capacity, rates are affected by geopolitical crises, fluctuations in foreign exchange rates, and pandemics around the world.
Agents can take steps to reduce the effects of these factors even though none of them are under their control.
It makes sense to schedule shipments before or after a season, for example. There are, however, limitations to reducing ocean freight volatility, which is the constant challenge forwarder agents face.
Commoditisation and competition
Ocean freight has become commoditised for most shipping companies. It’s all about taking the cheapest route.
The result is that freight forwarding companies have to compete against one another for business. Competition isn’t unique to this industry, as companies of all industries are often competing with each other.
However, the forwarding industry doesn’t offer much flexibility and creativity. Having forwarders digitalise their offerings and provide easy access to their services online is one way forwarders can differentiate themselves.
Alternatively, ancillary services can be bundled together and made into a premium offering, or segmented for smaller, more price-sensitive clients.
Shortages in the workforce
A shortage of workers is one of the newest trends across a wide range of industries. More than 40% of the workforce are the millennials, who are more focused on software, healthcare, and finance.
However, that’s not the whole story. It would still be a major problem for freight forwarding and shipping companies even if we didn’t count millennials. Over the next five years, approximately 55% of UK logistic companies will face a shortage of workers.
It might be too early to panic, but forwarding companies must act to combat this problem. Mentorships are one way to solve this problem.
It is probably a must to offer flexible hours, especially if you want to retain your employees. The importance of a competitive compensation package and a healthy company culture cannot be overstated.
There’s no secret in the shipping industry that it hasn’t been overly eager to adapt to new technology. Forwarding services cover a wide range, and changing from old practices to new can be challenging even with available innovations.
But when we consider the efficiencies and benefits that can be achieved, every forwarder should take on the challenge. The entire forwarding business needs to be digitalised, as previously mentioned.
There are, however, several other ways in which technology can transform freight forwarding. Among other industries, blockchain has made its way into healthcare, banking, insurance, and retail. Why not include shipping as well?
It is also possible to save time and money by implementing artificial intelligence into forwarding services. As a final point, investing in cybersecurity and safeguards is crucial given the volume of data handled daily.
Issues related to the environment
The issue of climate change should be taken seriously by all major industries. Fuel emissions from the shipping industry are not insignificant.
The problem is not just air pollution. It is also possible for oil spills to occur. Environmental issues must be addressed in the shipping industry because of its volume and frequency.
As part of their contribution to lowering air pollution, industry leaders should come up with effective forwarding services.
It is challenges that make us better
Any freight forwarding expert knows that unpredictability and constant obstacles are part of the job description. However, that doesn’t mean nothing needs to change.
There will always be challenges that freight forwarders cannot control. A shortage of workers in the UK is not one of them, for example.
There is no doubt that geopolitical issues and the changing laws and regulations are. In either case, adaptability is essential.
Any task can be handled by the best freight forwarders. You can depend on GenX Freight to handle your shipment professionally if you need freight forwarding services.