Forward Thinking Forwarders

While the B2C transportation industry has been mastered by companies like Amazon, it is the B2B transportation industry that keeps the economy in motion. While not a necessarily flashy industry, its importance has been overlooked and underestimated. Who are these unnamed heroes that carry out these behind the scenes feats you might ask? Freight forwarders.

               Freight forwarders or non-vessel ocean common carriers (NVOCCs) are companies that organize shipments from a manufacturer to a market, customer, or final point of destination. While this may seem simple in theory, the execution is anything but. Most Freight forwarders work in global markets ensuring customers receive their goods by any transportation method necessary: ships, planes, trucks, and trains are all fair game in this business. As if knowing these distribution methods wasn’t enough, freight forwarders must also be skilled in preparing import and export documentation globally and have an understanding of each country’s customs processes. Freight forwarding’s biggest benefit, aside from delivering product, is helping their customers save money. Forwarders are in a unique position to leverage different parts of the logistics industry and pass these savings onto their customers. This is one of the reasons NVOCCs have been increasing in popularity in recent years. Forwarding is a continually changing, fast-paced, and heavily regulated industry. This industry requires its members to be vigilant of geopolitical trends, environmental impacts, innovative technologies, and creative solutions in order to succeed at doing what they do best: cost saving.

               In the past decade one of the largest trends for manufacturers has been to develop strategic relationships in order to become more efficient, provide better service, and save money. Freight forwarders are starting to follow this trend by working more closely with their customers and shipping companies, rather than continuing in the adversarial relationships of the past. Shippers used to be less flexible on minimum quantities of cargo and the timing of when vessels would sail. Today forwarders and shippers work together to maximize the total cargo moved for the advantage of everyone. Genuine partnerships are formed to save money and time on all fronts. However, these strategic partnerships are a two-way street. It is important for the vendor, forwarder, shipper, and customer to communicate openly in order to serve each other’s needs to the best of their ability ensuring long-term success. Today, the way a company moves its freight can mean the difference between profit and loss, acceptance or rejection of a product line, and shifts in market share. The forwarder sits in the middle of these decisions, making their role as an industry expert even more valuable. It is paramount for a NVOCC to understand the ins and outs of what they’re shipping and where, because of the vast difference in profit margin that can result from a simple mistake.

               In order for forwarders to mitigate errors, openly communicate, and efficiently move product they must stay up to date with current technologies. Freight tracking, ERP systems, and B2B communication software are all musts in this industry in order to remain competitive and save money. Freight tracking systems from companies like Badger, Fleetio, and DTS Global all help forwarders stay on top of their goods in transit in order to know where their freight is at any given time. The information from these systems helps to keep goods safe, 3PLs reliable, and customers informed. Without this software, customers along with forwarders would be blinded and at the mercy of shipping companies. Software like this gives power back to the customer by providing them with real-time usable information. ERP systems are important for freight forwarders, like many other companies, because of the integration of information across all departments into a single location. These systems help to reduce waste as well as keep everyone within the company informed of what shipments are in the pipeline. Specifically for NVOCCs, ERP systems help connect the procurement side of the business to the shipment side by utilizing cross-platform visibility on all sides of the supply chain. Additionally, the ability to measure and assess past transactions is an immense benefit that ERP systems offer. This helps to reduce future mistakes and reinforce successful enterprise operations to continue servicing their customers to the best of their capacity.

               Computing global freight rates is a complicated process. If a company lacks freight rate management technology, calculating a detailed cost basis for a forwarder becomes impossible. This creates risk and makes every quote a potential money-loser for the company. Being early adopters of technologies will continually help improve freight rate management, decrease goods lost in transit, and increase the flow of information. The ability to communicate with your customer or shipping company is a constant need; it is important to utilize communication software via conference calls, translation software, or collaboration networks to ensure that all parties are in the loop as changes happen. It is a necessity to communicate effectively at a moment’s notice, easing your partners concerns quickly can translate into stronger future relationships and mutual trust between companies. While staying up to date with new technologies can be expensive and time consuming, it is almost always worth the investment to remain competitive and relevant in today’s fast-paced economy. In the long-term, technology investments should translate into cost savings for the customer, which is why they are so important. The espousal of supply chain technologies with its emphasis on information, means that knowledge about a shipment, is just as important as the shipment itself.

              At the end of the day, despite the major breakthroughs in technology, the forwarding business is a people business as much as it is information based. It is important to stay committed to personal relationships and to providing excellent customer service. It seems that as businesses move forward they move further away from the customer and in order to succeed in this industry that simply will not work. Freight forwarders must draw from the past and continue to build strong personal relationships as this will surely be a differentiator in the future. User-friendly technology combined with superior customer service is what will characterize the successful forwarder of the future. Furthermore, the future forwarder’s software needs to offer global IT systems that incorporate or are complementary to a shipper’s own systems. This will aid in further solidifying strategic partnerships, saving money, and reducing confusion once an item is in transit. Freight forwarders today wear many hats, but forwarders of tomorrow must never forget their roots. Their basic function today remains the same as it always has: moving cargo reliably, undamaged, and with ease.