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

With congestion issues and seaport gridlocks plaguing the transportation industry, air freight volumes are back on the rise. According to JLL’s annual Airport Outlook Report, global air cargo saw a 4.5 percent annual increase in 2014 and the forecast calls for 5 percent growth in 2015.

With a 3.1 cent increase, this week’s average price is $2.811, following last week’s 0.26 cent boost. The gains over the last two weeks come on the heels of a cumulative 16.3 cent decrease over the previous five weeks.

Transportation and logistics bellwether UPS began 2015 in solid fashion with first quarter revenue up 1.4 percent at $14.0 billion and operating profit up 11 percent at $1.7 billion. Earnings per share were up 14 percent at $1.12, which exceeded Wall Street expectations of $1.09, while revenue was shy of the Street’s $14.27 billion estimate.

Last week, the United States Department of Transportation took further steps to address various issues identified in recent train accidents involving crude oil and ethanol shipped by rail. The announcement was made by DOT with other DOT agencies, including the Federal Railroad Administration (FRA) and the Pipeline and Hazardous Materials Safety Administration (PHMSA).

Logistics Management Group News Editor Jeff Berman had an opportunity to interview Derek Leathers, President and Chief Operating Officer of Werner Enterprises, at this month's NASSTRAC Shippers Conference and Transportation Expo in Orlando. They discussed various aspects of the truckload market, including prices, fuel, and regulations.

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.