Air Forwarder’s Share View on Today’s Marketplace
In response to global challenges faced by most businesses throughout the past few years, freight forwarders have adjusted their business models in response to adverse economic demands.
Editor’s Note: Having just presided over the Airforwarder Association’s annual conference in Las Vegas earlier this month, executive director, Brandon Fried shared these insights with SCMR.
Supply Chain Management Review: How has the commercial landscape changed in recent years for freight forwarders?
Brandon Fried: In response to global challenges faced by most businesses throughout the past few years, freight forwarders have adjusted their business models in response to adverse economic demands. Few rarely focus on one single transport mode and most offer ancillary services formerly reserved for third party logistics providers. For example, forwarders once specializing only in next day air cargo may now offer various air service levels and ocean shipping to fit tight customer budgets. Storage, pick and pack and kitting services are common ways to increase revenue while addressing increasing customer needs.
SCMR: Do shippers expect them to have a wider range of skill sets?
Fried: Without a doubt. Regulatory compliance, multi-modal skills and evolving technology make “moving the box” a challenge like never before.
SCMR: What are the advantages and drawbacks of using multiple forwarders?
Fried: The Internet has allowed us to easily search multiple vendors for the best price and we see the same behavior as shippers leverage one forwarder against another in shopping for comparison rates. Some feel this is a necessary exercise to assure selected forwarders are adhering to market pricing conditions. But realistically, some forwarders have particular geographic strengths or specific knowledge in moving certain commodities making their selection advantageous over your normal provider.
SCMR: When is it best to use a “boutique” forwarder rather than a huge global player?
Fried: Some market niches lend themselves to specialists familiar and equipped to handle things like perishables, dangerous goods, artwork or tertiary markets. While huge global players may offer these services, many shippers find the use of smaller, specialized forwarders more comforting in handling these specific requirements while still using larger companies for traditional cargo.
SCMR: What are the major new challenges facing the forwarding community?
Fried: The recent merger announcement of US Airways and American creates concern that there will be fewer choices and higher rates. However, knowing that two weak carriers could combine as one for a more certain future may offset this. The grounding of freighter aircraft is always a concern since commercial passenger planes cannot handle everything and forwarders need access to these all-cargo operators for outsized pieces and large special project shipments.
Increasing regulation continues to concern the airfreight forwarding industry as the government becomes more involved in our operations daily. Security regulations are still evolving while enforcement increases as evidenced in the U.S. where TSA inspections are frequently common. International regulations continue to differ while the Airforwarders Association and other stakeholders urge rule harmonization between countries to avoid confusion and promote safety.
The industry is still not entirely focused on shifting to an electronic document environment while reducing the use of paper in shipping transactions. We know that generally, relying on digital instead of paper documents is efficient and prudent but many forwarders find either the financial barrier to entry too high or fear delays caused by other countries demanding need for paper to stay in the shipping and customs process.
We are also seeing shifting trade dynamics where shippers are beginning to near source manufacturing or take production to places like Viet Nam and away from traditional source countries like China. Also, what will the long-term impact be of 3D printing and technologies that could actually reduce the need for airfreight?
SCMR: What will this mean for shippers?
Fried: Shippers should not dare become complacent since the freight transportation market is constantly evolving. They should form a collaborative partnership with one or a few forwarding partners who can assist them in handling service, budget and regulatory demands and thereby avoid unpleasant and expensive surprises.
About the AuthorPatrick Burnson, Executive Editor Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at pburnson[email protected]
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