Global freight forwarding is expected to continue at a compound annual growth rate (CAGR) of at least 4% through 2020, reports the British International Freight Association. Unfortunately, that was revealed in mid-2019, and as the globe found itself in the midst of challenging trends, disruptions, and unprecedented demand for e-commerce, actual growth rates will inevitably fluctuate.
For small freight forwarders, this is an opportunity, and in many recent cases – a necessity, to rapidly scale business and secure more bookings. Even still, these forwarders potentially face slim profit margins, an antagonist to scaling freight forwarding. No doubt it will be a challenge, but it’s also entirely possible to scale freight forwarding and expand profit margins in tandem by following these steps.
Stay Proactive on All Shipments and the State of the Market—Working to Connect With More Shippers and Clients
Successfully scaling freight forwarding depends on the ability of forwarders to recognize when markets are favorable for carriers or shippers. Meanwhile, forwarders need to be aware of what’s happening in the world and what they can do to help shippers keep freight costs under control.
If you think about it, shippers turn to forwarders for help in moving freight further without the burden and costs of doing it themselves. That forwarder doesn’t have the tech teams, budget, tools that larger players have, but they do have the expertise and are well connected. If you want a higher client retention rate, then staying on top of trends, reading, and connecting with peers is essential. That freight forwarder knows rates domestically and abroad and thus is poised to have a higher client retention rate and generate opportunities to earn new business with that same set of clients.
Moreover, the informed forwarder can also work to secure better rates with carriers as rates shift. This is a key capability created through the ongoing analysis and automation of rating tools and index generators in modern freight forwarding platforms. Lastly, getting the rates now via API is also easier than ever, with more and more providers coming online.
Work Together With Collaborative Resources
Another critical step in scaling freight forwarding lies within proper collaboration with all supply chain partners.
If you lack clear communications and collaboration with carriers, shippers will experience trouble in dock scheduling, see the adverse results of delays, and even find themselves with higher returns rates. By working together, forwarders ease these concerns and ensure all freight is routed properly, booked, and delivered. It’s really the full shipment lifecycle that sets the experience for the customer; when customers are happy, clients are happy.
As a result, working together is key to keeping your clients returning for subsequent bookings. Also, cloud-based communications can go a long way in enabling clear, concise communications to reduce clicks and speed the quoting, booking, and tendering of shipments.
What’s also very important here, and with whatever software that you choose to help you complete this task, is to ask about those “customer portals.” And what the usage on those portals look like. Without proper design, and knowledge of customer experience, often these portals for collaboration go unused. And with many dollars also going down the toilet with them.
Know Your Total Transportation Costs With Real-Time Data Capture and Analysis
Informed freight forwarder needs to understand and collect real-time data to understand container availability, capacity, sailings, and more. This is especially true as global carriers continue to change shipment schedules in response to the current disruption. Scaling freight forwarding means knowing these costs, recognizing how existing inefficiencies can be addressed, and taking the steps to implement systems to collect, analyze, and act upon data. It’s simultaneously complex and simple—provided automated systems and processes are in place to handle the data management needs. Furthermore, this process allows forwarders to better plan for capital expenses.
According to Entrepreneur.com:
“New freight brokers need to be aware of the costs associated with starting the business, including, a laptop and cell phone for business use, potential office space, branding and marketing costs, freight broker licensing and bonding expenses, technology for managing the business, outsource professionals, such as an accountant or bookkeeper, and more.”
Be Transparent and Accurate on Delivery ETA and Any Delays
Maintaining transparency can be a difficult fact for scaling freight forwarding businesses. And if it hasn’t already been made transparent to you (pun intended) transparency is key to keeping your customers informed. Keep in mind that this can be a double-edged sword when things go wrong. Most supply chain business owners can tell if their operations are up to par very easily gauging how much business they are winning, and losing, from their more loyal, informed customers.
Regardless, it is that informed customer that is more likely to be understanding when issues arise. They get it and if you do a good enough job level-setting expectations, you should be OK when things go south. it’s imperative for small freight forwarders to communicate all of these types of expectations for each delivery as accurately and quickly as possible.
As reported by Entrepreneur.com, forwarders must “ensure your system is accurate when it comes to ETA for deliveries and any delays on delivery, giving clients peace of mind about using your service and the confidence to recommend you to others.”
Achieve Faster Speed to Market in Your Small Forwarding Business With the Right Digital Freight Forwarding Platform
For these reasons, the best path to scaling freight forwarding begins with using software-as-a-service (SaaS) platforms to create collaboration, productivity gains, and automation within all processes. Forwarders that make the switch to digital, SaaS systems can further integrate with other clients’ systems and reap the rewards of a future-proof freight forwarding business. Find out how to get started by requesting beta access to Cargologik today (yes, it’s 100% free – for now!).