Key Challenges Faced By The Freight Forwarding and Logistics Industry Today

There’s bound to be a curveball somewhere when it comes to how Zip Logistics handles freight forwarding and logistics.

We become disruptive in the sense that we ease into a world that constantly takes on different forms. Just like any other industry, the freight forwarding industry has its share of challenges and trends that create that air of uncertainty to the economy.

Apart from the fact that the volatile nature of the global economy affects the freight forwarding and logistics industry, there are other internal and external challenges and processes that impact both small- and large-scale freight forwarding companies.

Supply Chain, Trade, and Technology Wars

One factor is how much influence the e-commerce sector has today. Technology has made people communicate and even do business in the quickest, convenient and innovative ways.

Every business would require shipping or delivery of raw materials, products, and goods in different places. There is a raging war of machines or technology that clearly depicts how logistics can clearly win you more leads and sales or could contribute to your loss in the supply chain wars.

Freight forwarding and logistics are now facing a market or audience that is fundamentally shopping-crazed. Well, you couldn’t really blame customers because e-commerce has made shopping and business transactions a walk in the park.

Logistics helps take care of the laborious part like delivery or cargo shipping, so you can easily focus on optimizing your business or shop ‘til you drop; so-to-speak. And that is just a part of how freight forwarding and logistics work by the way.

Up Against More Competition

Freight forwarding companies are widely fragmented. It’s a dog-eat-dog kind of competitive arena because, in order to stand out, the freight forwarder must bring to the table the best prices and services when pitted with other companies.  

The international trade and supply chains are complex as it is. Now, freight forwarders must be equipped both in data and physical technology to cope with upcoming trends and disruptions in the industry.

Even Amazon and Alibaba have joined the freight forwarding arena by having their own distribution systems. This could pose both a threat and an opportunity for many freight forwarders to step it up and add more value to their client processes.

Disintermediation

Freight forwarders are basically intermediaries in between supply systems or the freight carriers and shippers. Disintermediation works on getting the middlemen out of the picture.

However, freight forwarding companies have become very proactive using digital and cloud-based technologies to enhance data management and automate their processes which include online booking, online reporting tools, freight quotations, as well as track-and-trace capabilities. This facilitates speedy communication and also enhances flexibility and transparency in transactions.

These attempts to getting rid of the middlemen or freight forwarders have only made these companies more agile and competitive than ever. This has raised the bar for everyone that benefits the entire trade industry.

Even small startups can now have the entire world as a target market for a minimal cost because of freight forwarding services that offer a more personalized and customer-centric approach.

Increase in Forwarding Costs

The international trading currency would be usually in the US dollar which is very volatile. This affects both freight forwarding costs as well as market prices which impacts customers the most.

Rising oil prices in the international market also directly influence freight forwarding costs which hits freight forwarders the most.

In addition, service charges or fees also vary from point to point which is also carried over by freight forwarders. Transport infrastructures too are not always ideal which could result in increased maintenance costs.

The Main Challenge – Price Tag Vs. User Experience

Many people or businesses see freight forwarders as mainly the “delivery company” which puts more emphasis on the price tag rather on the quality of services. This is referred to as commoditization.

So, this makes it harder or challenging for freight forwarders to win based on user experience when shipping companies would win by price.

The main challenge of many freight forwarders today is clearly how to put the spotlight on “user experience” and personalized services especially in a market that is always on the lookout for cheaper and quicker deliveries.

Providing integrated, value-added, data-driven, technology-backed, and customized services with cheap pricing allow Zip Logistics to remain competitive in this game.

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