March 18, 2021

How to Gauge Profitability as an Independent Freight Forwarder

Miles Varghese
Miles Varghese
Helping independent freight forwarders/brokers better stay in-sync, collaborate, and improve operations with their shippers/clients. Co-founder & CEO @ Cargologik.com

Working in the industry, partnerships with an independent freight forwarder remains a real game-changer when adjusting to current industry trends.  

As reported by SIPMM, “Because of all the business they can put a carrier’s way through numerous different clients, freight forwarders are in a strong buying position to drive down prices. Left to negotiate their own rates, very few shippers would have the same leverage, and would end up paying higher rates than an agent could negotiate on their behalf.” 

Several ways exist to help management gauge such a partnership’s profitability and maximize results. This is also possible when working with or as an independent forwarder. And it’s essential to understand and see the degree of profitability too.

1. Know Your Revenue by Carrier and Shipper

When working with multiple 3PLs regularly, it remains essential to frequently check revenue rates. Knowing how each carrier and shipper, and broker impacts your bottom line will ensure you have a successful forwarding network. Independent freight forwarders that add to the profits can be bolstered appropriately, and those that waste money must get cut. Integrations with your project accounting and billing systems such as Quickbooks or Xeero are important – and being able to feed data into those financials really help level up an organization’s performance.

2. Track Data From Across the Full Network

Tapping into big data and implementing innovative technologies can help improve productivity with independent freight forwarders. Accessing, analyzing, and implementing data from the network give you a clear picture of real-time standings. Issues can get identified quickly and dealt with before they cause significant disruptions with the right platform for freight forwarding.

3. Remember Your 3PL and Brokerage Partnerships

Managing an efficient and profitable supply chain has always been a team effort, including leveraging your unique value as independent freight forwarders. That has never been more true than it is today, as recovery continues across industries and fleets, large and small alike. Shipping managers must rely on strong mutually beneficial relationships with carriers, brokers, forwarders, and must not be afraid to help one another.

4. Use Big Data Analytics to Measure the Health of the Business

Proper data analytics and intelligent use of real-time data can give forwarders insight into the business’s measurable health. Strengths and weaknesses are more easily managed. Trends are noted with independent freight forwarders, and predictable disruptions can be overcome with ease. This gives the supply chain an upper hand against competitors that do not use real-time data.

5. Know When to Accept Versus Reject Quote Requests

When disruptions occur, and maximizing capacity grows challenging, any bid or freight request that comes can appear tantalizing. Jumping at every bid may increase risk as taking on loads that won’t pay off in the end only cost money without giving any profits in return. Knowing a valuable quote from a worthless quote helps ensure independent freight forwarder contracts stay profitable.

6. Streamline Payment Management With Integrated, Digital Freight Invoicing, and Settlement

The final way to make independent freight forwarder partnerships more profitable involves improving the freight payment process. Invoicing, payment record management, transaction initiation, and digital payment processing can be enhanced with modern technology. It helps to speed up the process, reduce delays, and ensure on-time payments. It all helps keep the supply chain running efficiently while improving working capital.

Do It All With A Cloud-Based SaaS Forwarding Platform

Independent freight forwarders and other 3PLs can help ensure a smooth and profitable supply chain network. Working with advanced technology, real-time data, automated systems, and other advanced technologies strengthens the entire chain. And that’s a critical function for independent forwarders that wish to stay profitable. Getting started doesn’t have to be complicated. Sign up for a free trial to Cargologik today.

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