Challenges facing freight forwarding in international business in 2020.
Freight forwarders in 2020 are facing more challenges than every year. The only significance of this year is anyway the pandemic. It stays as an unavoidable barrier in the way. Though the challenges are most common, the rise of the pandemic has exaggerated them this year.
- Lower demand: after the outbreak, most of the countries implemented lockdown. This restricted global economic activity. The demand for freight forwarding services declined. Lately, though things are coming back to normal, the post corona effects will still be presenting the challenges. Existing challenges will only be an extra part of the main challenges this year.
- Detention during COVID-19: this is an issue you have to talk to your customer about. Freight forwarders might be unable to transport cargo on a shipper’s behalf without the availability of trucking or warehousing anymore. Until further decisions are made, ocean carriers will continue to charge shippers to incentivize to collect cargo. Such charges may increase over time. You need to work with your customers and come to a solution to avoid these charges.
- Ocean freight rate volatility: ocean freight rate management is very complex. Accounting for the factors that make volatility is difficult too. Factors affecting freight rate volatility include a mix of….
- Service charges.
- Bunker capacity.
- Peak season surcharges.
- Container capacity.
- Geopolitical crises.
- Global pandemics.
- Foreign exchange rates.
- Shipping industry innovations.
These elements affect ocean freight rate volatility. Reserve or book your shipments before or after seasons. Post COVID-19 may also change the dynamics of shipping, making the above list of factors more complicated. The rate of fluctuations will be constant.
- Competition between freight forwarders: shippers place a heavy emphasis on rates and perceive ocean shipping as a commoditized service. Freight forwarders must frequently compete for business. Innovate, bundle, and segment. Digitalize your offerings online, add differentiated ancillary services, focus on providing services to less price-sensitive customers. Freight forwarders aren’t the only players in shipping though. A new pathway to beat the commodity trap lies in digitalization.
- Adopting new and innovative technology: the shipping industry hasn’t been fast enough to adopt new technologies to enhance efficiencies. The most efficient idea of technological innovation in shipping is digitalization. Digital platforms can offer instant quotes from carriers. They also enable you to drive more traffic.
- Shortage of workforce and retention problems: employers are starting to see new trends. Nowadays most workforce is looking towards industries, healthcare, pharmaceuticals. Create a mentor program, offer flexible hours, offer competitive compensation, and create a company culture.
Thus, these are the challenges a freight forwarder may face this year. Along with them, we’ve also mentioned the ways by which you can overcome them. Hope you succeed in whatever you do.