Finding the proper mix of services while mitigating risk has never been more complicated for freight forwarders, say industry analysts. That means, of course, that global shippers must be even more vigilant than ever in vetting service providers when looking to expand their transportation networks across expanding borders.
“Data automation allows supply chains to benefit by providing both the shipper and consignee an opportunity to participate in forwarder selection and transit visibility,” says Brandon Fried, executive director of the Airforwarders Association. “Because recipients often pay for the shipping, forwarders should have a presence in foreign markets, capable of cultivating relationships with buyers making critical logistical decisions for local vendors in other countries.”
Fried adds that technology certainly assists in making the necessary communication and handling possible, but only to a limited extent. Furthermore, one size does not fit all. “No standard strategy or platform is determining how, when, or under which circumstance to use the data,” he says. “Sooner or later, personal interaction becomes essential in arranging contracts, dealing with exceptions, or just loading the boxes.
Cathy Morrow Roberson, president of the consultancy Logistics Trends & Insights, agrees with Fried’s take on the current situation, noting that shippers should demand end-to-end visibility in management of shipments through final delivery to the end customer irrespective of their location. In addition, shippers now expect visibility with suppliers and other stakeholders regardless of location.
“Forwarders tend to be well versed in global trade and can orchestrate trade between ports and airports,” says Roberson. “In addition, they’re knowledgeable with a country’s customs and duties requirements and will be able to advise shippers of these costs and estimated time for clearance. However, for the final-mile delivery, forwarders will now need to add that same level of transparency and partner with a either local providers or a global providers with appropriate assets depending on the country.”
Roberson maintains that WiseTech as well as Descartes have made solid strides over the years to broaden their capabilities in transportation network management. In addition, logistics providers and forwarders have—or are in the process of—building shipper portals to give as much control and management of cargo moves to the shippers themselves without them having to constantly try to contact a company representative for updates or concerns.
“Kuehne + Nagel and DSV are examples of leaders in the industry providing this,” says Roberson. “Panalpina launched a customer portal this autumn for ad-hoc air freight that includes rate quotes, booking and visibility. The ultimate plan is to expand this globally, since shippers are asking for more global options.”
Still, says Roberson, the basics in evaluating and determining forwarder partners when entering new markets remains the same—determining a basic strategy is key. “A shipper should want a partner, and not just a vendor,” she says. “After that has been established, the shipper should look into the financial status of the provider.”
Other areas of diligence include an examination of the forwarder’s experience and demonstrated knowledge of the targeted markets. Then, shippers should examine the forwarder’s partners, agents and local providers. Finally, shippers are encouraged to check on how well versed forwarders are with regulatory compliance certification requirements.
“Entering new markets presents many risks, but also great rewards as long as shippers are patient—particularly within emerging markets,” concludes Roberson. She also insists that shippers have a clear strategy for profitable growth. This often means close collaboration, as “continual adjustments” are going to be made throughout the process.
Barriers to entry in freight forwarding, especially the transportation network management sector, have been steadily coming down as a consequence of digitization, notes Eze Fiszerman, marketplace supply manager at Freightos, a SaaS-enabled technology provider that’s focused on instant freight quotes for forwarders and shippers.
“The advent of the internet gave smaller forwarders a bit of a break some time ago,” says Fiszerman. “This is not unlike the more than 100,000 online retailers that are netting over $100,000 in revenue monthly from selling on Amazon.”
However, Fiszerman adds that larger forwarders still have advantages of size, complexity and reputation. With these benefits, they get invited to tender for big shipper freight contracts. “But they don’t so much win them on service, they win on price,” he says. “That’s good for the big shippers—the Starbucks, Walmarts and Apples that demand business class service for an economy-price ticket.”
GTM’s Role: Finding the right tools
Finally, for shippers wishing to bring their own in-house expertise to transportation network management, even more vigilance may be needed. Implementation and use of global trade management (GTM) software and services is essential, add analysts.
However, finding the right partners who can assist shippers with implementation is not a simple task. Furthermore, it should include methodology that focuses on providing value from process re-engineering all the way through deployment.
“Most shippers don’t realize that there’s a significant amount of work that needs to be done before approaching GTM software vendors,” says Beth Pride, president of BPE, a trade compliance consulting firm based in San Francisco. “This includes requirements, definition, and then GTM vendor selection.”
Pride insists that shippers must identify what they need in terms of feature functionality so that the vendor selection process is objective and straightforward.
“That includes identifying process gaps by creating detailed business process flows and system maps,” she says.
This may also mean logistics managers will be charged with “stakeholder buy-in” and business case justification. Then they must develop business requirements including an RFP and RFQ specific to their requirements. Finally, after the GTM vendor has been targeted, the challenge to negotiate the best service contract still remains.
The key to the implementation phase is to develop creative solutions and a proof of concept, says Pride. This includes the following implementation components:
- develop project timelines and project plan;
- develop database model and conversion plan;
- create data migration plan;
- develop and execute test scenarios;
- create document and report requirements; and
- establish a training and education plan.
“In addition to training their employees on the solution itself, shippers should create the training materials based on their internal procedures and operations,” adds Pride. “This means finding support for the rollout of any additional implementation phases, and upgrades or bug fixes.”
– Patrick Burnson
Fiszerman adds that it’s good for the larger forwarders too, because they tend to attract much of their business by sacrificing profit margins, but compensate by selling to small shippers at much higher rates. Brand recognition is another advantage for larger forwarders. Familiar brands attract small shippers, anxious about international shipping and having no real way to compare service levels. For larger forwarders, then, publishing rates would be counter-intuitive.
“So, when it comes to small shippers, historically they got a raw deal—higher prices and no real way to compare service or rates,” says Fiszerman. However, that’s all about to change as freight rates become more transparent, as they have in other industries. “Smaller forwarders are better at pouncing on an opportunity,” he adds. “I’ve helped dozens of smaller forwarders, and the well-organized ones publish their door-to-door rates in short order.”
Another forwarding upstart is telling shippers that with Amazon entering the picture, they should be far more mindful about sharing data. “There’s a lot of hesitancy to turn over sensitive data to a company like Amazon,” says Ryan Petersen, founder and CEO of Flexport, a San Francisco-based digital forwarder. “Your supply chain partner could suddenly become your competitor in today’s digitized marketplace.”
Amazon has created its own private label clothing, for example, and has entered the grocery delivery business. Analysts suggest that it may also be competing with shippers in the pharma and electronic appliance sectors in short order.
Haste makes waste
Because many shippers believe that world trade is inherently social, Flexport and other digitized platforms are betting that every supply chain stakeholder will want to get one step closer to their goals of powering a seamless web of commerce. But at least one prominent industry analysts says that may be easier said than done.
“As companies moved to more outsourcing and increasing reliance on global supply chain partners, the traditional software architecture has become increasingly less relevant,” says Steve Banker, vice president, supply chain management at ARC Advisory Group. “But that means more reliance on new models that goes beyond mere automation.”
According to Banker, one example of that trend was signaled when Kewill acquired LeanLogistics last year. Kewill is known as a solutions provider to freight forwarders and shippers with global footprints across a range of activities, including WMS, customs documentation and yard management. It was also one of a few providers globally that had developed its own parcel management system. LeanLogistics was known primarily for its Cloud-based TMS and associated managed services.
Now known as BluJay Solutions, it has forged a number of high profile deals with international forwarders and shippers under the auspices of the BluJay Global Trade Network.
According to Banker it will be interesting to watching how shipper organizations will be leveraging that collaboration. For example, Dannon, the White Planes, N.Y.-based yogurt company, was seeking a partner to track priority deliveries to customer or distribution centers and provide details on any delays with availability of real-time data to all load planners and transportation staff.
Mariano Lozano, CEO of The Dannon Company, notes that his company works in a fast-growing marketplace that has unique demands on the supply chain due to the shelf life of the product and its distributed operation. “With this approach, we’re able to manage transportation from shipment tender through delivery, making service a competitive advantage,” he says
Importing and managing the logistics of your precious freight is no easy task. Compliance to U.S. Customs & Border Patrol is essential to your cargo clearing customs. Use a freight forwarder to lower your chances of having shipment delays and to oversee all of your international freight logistics. Contact a customs broker to file your ISF and issue any pre-alerts to avoid penalties and delays, and arrange your ocean freight and imports customs clearance.