The readiness to take on complex tasks is at the core of the freight forwarding industry. Having plan B and C when plan A doesn’t work out is how forwarding experts operate.
However, times are changing fast, and industries must follow. The challenges of non-vessel carrier companies have evolved over the years, and those that adapted managed to succeed in the long term.
In this article, we want to discuss the most significant current challenges for a freight forwarder. UK-based businesses requiring forwarding services should know what to ask their agents and how these issues will impact them.
The Volatility of Ocean Freight Rate
Every experienced freight forwarder knows about the complexity of ocean freight rate management. Almost every factor that determines the rate is unstable by definition.
Apart from constantly changing service charges and container capacities, rates are influenced by geopolitical crises, foreign exchange rates, and global pandemics.
While none of these is under the control of freight forwarders, there are some steps agents can take to reduce the effects.
For example, booking shipments well before or after a season is a good strategy. However, minimising ocean freight volatility isn’t always possible, and that’s the constant challenge forwarder agents are facing.
Competition and Commoditisation
For most shipping companies, ocean freight is a commoditised service. It’s all about going with the least expensive route.
It leaves freight forwarding companies in the position to compete against each other for business. This is not a unique challenge per se, as companies in any industry are often in competition.
But there isn’t a lot of room for flexibility and creativity in the forwarding industry. What forwarders can do is digitalise their offerings and allow easy access to their services online.
Another strategy is to bundle ancillary services for buyers and make them their premium offering, or rely on segmentation with smaller, more price-sensitive clients.
One of the newest trends across various industries is the workforce shortage. Nearly 40% of the workforce are millennials who are more oriented towards software, healthcare, and financial services.
But that’s not the complete picture either. Even if we didn’t count millennials, freight forwarding and shipping companies would still have a major problem. Close to 55% of all UK logistic companies will face worker shortages in the next five years.
Perhaps it’s too soon to panic, but forwarding companies are required to take action to combat this issue. Creating mentorships is one of the solutions.
Offering flexible hours is probably going to be a must, especially when it comes to retaining employees. Of course, competitive compensation and a healthy company culture will go a long way too.
Adapting to Innovation
It’s no secret that the shipping industry, in general, hasn’t been overzealous when it comes to adapting to new technologies. The scope of forwarding services is broad, and even with available innovations, changing from old ways to the new can seem overwhelming.
But when we consider the benefits and the operational efficiencies that may ensue, it’s a challenge every forwarder should take on. As mentioned, digitalising the entire forwarding business is essential.
However, there are several other ways technology can transform freight forwarding. Blockchain has found its way into healthcare, banking, insurance, and even retail. So, why not shipping too?
Also, finding ways to implement artificial intelligence into forwarding services can save time and money. Finally, investing in cybersecurity and safeguarding is crucial given the magnitude of data that is handled on a daily basis.
The issue of climate change is something every major industry should take seriously. The fuel emissions caused by shipping industries are not insignificant.
It’s not about air pollution alone. There are potential oil spills too. The volume and frequency of the shipping industry demand that environmental issues are addressed.
Leading companies in the industry should come up with effective forwarding services while playing their part in lowering air pollution at the same time.
Challenges Are There to Make Us Better
For any freight forwarding expert, unpredictability and constant obstacles are in the job description. But that doesn’t mean nothing ever has to change.
Some challenges will always be beyond the control of a freight forwarder. UK workforce shortages in the industry, for example, is not one of them.
But geopolitical issues and changing laws and regulations most certainly are. Either way, adaptability is key.
The best freight forwarders in UK can tackle any task. If you want professional freight forwarding services, contact GenX Freight and let us handle your shipment.