The Newage Blog

All logistics and supply chain experts always think lots of business ideas to maintain an ever rewarding forwarding business and become a profit making freight forwarder.

 Nowadays, amidst this cut-throat technological competition, getting success is easier than maintaining it for long.  

With digitalization coming at very less resource requirements, the market is open for all and no one can create monopoly over it and remain king forever. Today, we all are in the same page and here achieving and maintaining that achievement has become one of the most serious problems for the forwarders of the current times.

A big company and small startups, both have to work hard continuously, and a bunch of tech-savvy resource from a small start-up can disrupt the entire industry.

As we know, a Freight Forwarder handles the movement of goods from point to point on behalf of the cargo owners. The essence of freight forwarding is to ensure that any forwarder collects and delivers cargos from the seller to the buyer, at the right price, at the required place, with the right condition of the products when it was picked up. They need to even find out the most suitable and optimal carriers, containers, and shortest routing possible.

Here, whosoever is able to provide the same services at the most reduced price and are able to maintain that cost for long are categorised as the winners.

But it is easier said than done, and just like any other businesses, there are lots of real-time challenges which forwarders have to face to maintain their services. These challenges may come at the cost of increased discharging rate of freight forwarding business. There are various costs like variable cost, fixed cost, statutory and incidental costs. Let’s discus them all one by one.

• Variable costs– These costs are beyond the control of any forwarders like freight rates, fuel costs, road/rail haulage. It is because, the fluctuation of these costs are based on market demand and supply.
• Fixed costsare costs that remain the same over a period and doesn’t change even when the volume of the output varies, like staff costs, operating systems, warehouse rent, and more.
• Statutory costs– These are some costs which are enforced the government of the land like Customs Duties, taxes and other costs related to or enforced by Governments.
• Incidental costs– There are various costs which incurs while we operate the freight forwarding job in the real-time like Demurrage, Storage, Detention and various other costs that are not taken under consideration during the invoice generations by the seller or buyer in the supply chain.

• Then there are various invisible costs which forwarders have to bear to run the businesslike hiring resources to gather market intelligence, business plans, negotiations, enforcing contracts and transactions.

The future of transportation & logistics industry is bright. Today, forwarders admire the importance of digitalization and digitization in their forwarding business. They can not only come up with highly rewarding business ideas but also quickly wrap up any unsuccessful strategies. 

In the past couple of years, specially after the global outbreak of deadly coronavirus, the transportation and logistics industry has completely changed. During recent pandemic lockdown, the forwarders who were running their freight and logistics business on the digital platform were the least affected. While those who were following the traditional business practices got wiped out of the market.

Digitalization has saved the global economy from becoming standstill. It the perfect answer for various limitations attached with the traditional approach. This major shift will stay here for long, because of its attached benefits.

So in this article we will look into those benefits which compel forwarders to framing their business strategies around the digitalization. But before discussing much about the digitalization, we must look into what our national and international bodies are saying about it.

As per the 46^th annual report of World Economic Forum 2016, Davos, Switzerland

The theme of the 46th annual report of World Economic Forum 2016, Davos, Switzerland, was Mastering the Fourth Industrial Revolution. As per this report, the third decade (2020-2030) of the 21st century will witness most industries undergoing the digitization process. In the coming future, the digital transformation will completely envelop the global economy which includes the transportation and logistics sector. 

Klaus Schwab, the founder of the World Economic Forum, described the fourth industrial revolution as the combination of hardware, software, and biology (cyber-physical systems). Here the cyber-physical systems mean a computer system that runs on the mechanism controlled or monitored by the computer-based algorithms and exhibit multiple and distinct behavioural modalities like human beings.

In this way, the companies which will work intertwine with the technology will rule the economy, while the companies resisting these inevitable changes will get washed away. 

This ongoing digitalization and automation of traditional manufacturing and industrial practices will benefit all industries irrespective of the work. Even the Logistics and freight industries have not remained untouched, and they are getting unparalleled benefits by onboarding the software that can run their machines with cognitive abilities like humans.

Customer experience is all those interactions (brief or detailed) that a customer has with an organization.

– Annette Franz, founder, CX Journey

The Freight Forwarding industry is one of the most rewarding and dynamic businesses in the world. It bridges the gap between two distant places across the globe while moving cargo from one place to another. In other ways, we can say that forwarders always become a reason to smile among people.  

However, this easy-looking task of shifting cargo involves a great effort to overcome the dynamic challenges of a freight forwarding industry. Forwarders face challenges like frequently changing EXIM rules and regulations, shortage of drivers, lack of visibility, and a lot more. They always desire a technical solution that could solve their problems and allows them to serve seamlessly even beyond the boundaries of their countries. In this regard, only the digital platform and ITeS driven services can help freight forwarding companies by automating their entire processes.

Now selecting a perfect software that could work as a single-window platform is big trouble, as the market is full of software. Forwarders want fully customizable and scalable software that can nicely fit with the demands of their specific businesses.

This article will give you insights into a globally recognized freight forwarding software, eFreight Suite, which helps forwarders move cargo on FastTrack. 

Nowadays, customer experience is becoming the deciding factor for business units, whether their product and services will sell or not. In the freight industry, forwarders must remain aware that even a single incidence of bad customer handling can affect their customer’s decisions about their products and services.

So nowadays, customer service has become the next competitive battleground for forwarders if they want to get an edge over their competitors. In this battle, one who will focus on their products/services alongside the customer support will win the race.

As per 2019 Logistics tech Trends, 98% of logistics companies have admitted that customer service has become the most critical business strategy. And 55% of them have accepted that maintaining 24/7 customer services is their biggest challenge, and they badly need to outsource them all.

Firstly, let us see some of the prominent challenges to maintaining good customer experiences.

The above quote of Darwin fits well with the lives of forwarders as well. Since time immemorial, when forwarders started shifting cargos from one place to another, the freight industry has gone through umpteen changes. Those forwarders who adjusted their working style as per the changes that came to the business world have survived, while scores of forwarding companies got washed out from the industry because they didn’t change with the changing business needs.
Changes are an inevitable part of any business, so forwarders must embrace them with open arms.

Today in the 21st century, technological changes come to the business world daily. The forwarding industry also needs to adopt all those changes to maintain the balance between the cut-throat competition and the restless customers.

If your forwarding company is struggling to maintain profit, then check these 4 signs in your company. And if your company has these signs, then invest in the freight forwarding software. There are myriads of benefits of investing in freight forwarding software.

We cannot deny that digitalization was slowly and steadily increasing its grip over the business world across the globe. The dream of an ideal economy where all companies getting benefitted from the digital platform was not very far.

However, the COVID-19 crisis has significantly increased the speed of digitalization, and within a few months or a year, it will completely envelop the world.

Of course, the benefits of digitalization are many, and all successful logistics companies use those benefits to get an edge over their competitors. They use digital platforms for risk management, data analysis, customer connection, tracking consignments, and a lot more. With technical support, freight and logistics companies boost up their forwarding business and get rewarding business plans.

Newage comes across scores of forwarders and logistics experts daily while working in the freight and logistics industry. They always have questions about how the future of the freight industry will unfold itself. More than 90% of the discussions hover around the upcoming technological changes in the freight and logistics industry.

We have chalked down Top-4 regularly asked questions with their answers from our SMEs. Once you read all these questions, you will accept the increasing importance of digitalization in the forwarding industry. All your vacillation toward shifting your business to the digital platform will vanish out.

Today’s modern technology enables people to buy anything from the comfort of one click, track the order in real time and share their happiness or vent out their frustration instantly through social media. We are in midst of covid-19 pandemic, corporates are trying to streamline their work between regular office and remote work from home model. In this highly volatile environment, managing the logistics activities comes with its own set of challenges.

With the frequent lockdowns and the disruptions in supply chain, freight forwarders needs to live with uncertainty where the predictability of the near future goes for a toss. While the demand is gradually picking up globally, there are supply side constraints such as shortage of containers, soaring price of container rates, port congestion etc. In this new reality, one of the major challenges is to address the communication and collaboration among the various stake holders real time. Freight forwarders need to deal with fragmented nature of business environment composed of various stakeholders as shown in below picture

Demurrage fees and similar costs were initially introduced to help reimburse storage, warehouses, and facilities for their usage and equipment. This can be anything from containers to container yards, freight stations, and more. The storage spaces and equipment within are allotted an allowance period of a few days where no charges are raised. If the concerned party overstays their welcome, these charges aim to be an incentive by equipment and space owners to make the facility readily available at the earliest.

However, these expenses are not equally taken in the best terms by all parts of the supply chain. Ocean freight customers, for instance, tend to regard demurrage charges as unnecessary additional costs and would seek to avoid them as far as possible. But this is for a good reason – incurring these charges will add to transportation costs and will tend to cause delivery delays, stoking, degrade sales, and eventually tarnish brand image. Gladly, reductions in these costs can be made possible in a number of different ways using freight services to an advantage.

So, let us consider the different ways in which efficient freight services can help reduce demurrage chargers:

Previous decades have faced little to no new issues in the realm of trade finances. Most trade barriers were kept well at bay through regional agreements, reduction of non-tariff barriers, and so on. However, in recent times of growing uncertainty, many such obstacles have resurfaced between previously harmonious countries. Trade has become glowingly tricky due to increased tariff and non-tariff expenses across borders which, in turn, continues to affect global economies.

To simplify things, a tariff is a form of tax levied on imported goods. The amount charged is based on the unit price of a given product. Moreover, there is no prominent trend in these fluctuating tariffs. The change in tariff values is incredibly reliant on the economic leader and exiting global climate. A great example would be China’s charge of a 25% tariff on $16 billion worth of US cargo in 2018 due to escalating bad blood between the countries.

It seems there might be no way to predict the way in which these tariffs will be influenced. However, there are specific strategies that you may employ to handle better the uncertainties that are involved:

The pandemic has taken its toll on most industries around the world. However, none are as prevalent and evident as the hurdles faced by the logistics industry – particularly in the flow of the supply chain. Global supply chain leaders continue to face the aftermath of reduced labor, operations, and business overall. Not only that, but they must also deal with the repercussions of other members in the chain being hindered in the same way.

This domino effect has motivated individual members of the supply chain to adapt to the new climate quickly. Business leaders on all fronts are attempting to reshape and repurpose their endeavors to help minimize the potential damage.

But even though this apparent darkness, there is still room for light. The current disruptions to the supply chain have opened much space for creative solutions which aim to mitigate damage. But to better appreciate the effort of these solutions, we must first correctly understand the impact of the obstacles.

Cargo shipping is faced with an increasingly daunting challenge in recent times. The current volatile circumstances have taken a considerable toll on both shipment time and shipping rates. And logistics providers around the world are being forced to brace for the impact.

Although there are several factors involved on a large scale, the major contributors to this change can be considered congestion at the ports and a drastic lack of shipping containers. Moreover, the cause and effects of these contributors and other factors are cyclic in nature. In fact, diving deeper into the cause/effect of these challenges reveals that they may just be two sides of the same coin.

But to properly grasp this possibility, we must first take a look at the significance of these factors independently: