Air Forwarders Association Leader Shares Industry Overview

By Patrick Burnson, Executive Editor
March 11, 2014 - SCMR Editorial

Editor’s Note: When the Air Freight Forwarder’s Association (AfA) stages its annual conference later this month, the focus will be “closing the deal.” Here, in a two-part exclusive interview with AfA president Brandon Fried, supply chain managers are given an overview of some of the main issues on the agenda

Supply Chain Management Review: The growth in the number of freight forwarding companies joining the Airforwarders Association (AfA) has reached unprecedented levels, with the organization’s regular membership rolls expanding by nearly 25 percent over the past year. What does this say about shippers’ plans for the future?

Brandon Fried: The economic downturn that began in 2008 created a challenging environment for freight forwarders and their customers worldwide. In fact, many of us are still clawing our way out.  Economic uncertainty and reduced demand has shippers asking their forwarders for lower rates and slower transit options. This is quite understandable, and forwarders have responded by offering a variety of service options using various modes of transport in addition to air cargo. 

At the same time, the expanding regulatory framework continues to affect the forwarder community with still more rules and regulations expected in areas such as advanced screening and stricter lithium battery handling.

SCMR: So the advantage of leveraging your organization is…?

Fried: Joining AfA allows forwarders to concentrate on their business while relying on the association to follow regulatory and legislative activities, engage in government relations and advocacy, and manage essential education programs. Forwarders realize that achieving future success not only involves assuring ongoing shipper satisfaction but also an understanding of the wider industry provided by AfA.

SCMR: How do shippers develop relationships outside or apart from trade associations?  Are the strategies mutually exclusive?

Fried: Trade associations play a vital role in helping shippers and forwarders network and gain valuable educational information. While these resources are certainly available outside, organizations serve as a focal point for easier accessibility to these resources. In the case of AfA, we not only provide these opportunities but advocate for the industry and even specific members constantly. The legal expertise and industry assets under AfA’s umbrella provide advantages that are difficult to obtain individually.

SCMR: Makes sense. But what are the barriers of entry for new forwarders? Is there room for more?

Fried: Since the forwarding industry is based on the expertise of people and leveraging of personal relationships, barriers to entry are few. Understanding the various transportation modes, freight handling and warehousing are essential, but in today’s environment a working knowledge of import and export regulations, banking, hazardous material rules, Customs procedures and – of course – security requirements is critical. Adequate funding for station technology and facility investment is important.  A sufficient credit line to pay carriers and vendors is necessary since shippers may not pay as quickly as invoices become due.

SCMR: How much will forwarders need to spend on new technology to remain competitive?  What kinds of systems yield the greatest ROI?

Fried: As forwarders become more e-freight focused, where paper is being replaced by the electronic transmission of shipping and customs related documents, adequate technology to handle the task is essential.  Fortunately there are many good software vendors in the market offering suitable solutions for any sized company. Members tell us that the move to cloud-based systems are gaining in popularity since they tend to be more secure and alleviate the need for expensive mainframe hardware.

Tomorrow: a look at the “cold chain” and emerging markets.



About the Author

image
Patrick 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 .(JavaScript must be enabled to view this email address).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Following the lead of its Congressional Colleagues in the House of Representatives, the United States Senate yesterday approved a measure geared to keep federal surface transportation funding intact through the end of December with a nearly $11 billion stopgap fix.

XPO Logistics announced second quarter earnings and the acquisition of two companies, New Breed Logistics, a non asset-based 3PL focusing in contract logistics services, for roughly $615 million, and Atlantic Central Logistics, a 3PL provider of last-mile logistics services, for roughly $36.5 million.

The report, entitled “Outlook for the Domestic Transport and Logistics Market in 2H14 and Beyond,” takes the view that strong freight levels in the second quarter have left trucking companies in a good position: one in which they need to come up with new plans to handle rising demand. But even with that positive momentum afloat, the report observes that there are some familiar challenges intact, such as a lack of qualified drivers and the regulatory drag from the new hours-of-service rules that took effect in July 2013.

Flags of Convenience are a fact of life in the commercial maritime trade, but several European political action groups are worried that they will pose a threat to the Continent’s air cargo industry.

For May, which is the most recent month for which data is available, the SCI is -7.5, following April’s -7.5. FTR said this reading represents a still-tight capacity environment, as utilization rates hover between 98 percent and 99 percent.

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers 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. Contact Patrick Burnson

Comments

Post a comment
Commenting is not available in this channel entry.