Trends in Forwarding

Oct. 16, 2006
The old analogy of a freight forwarder as a travel agent for freight is changing into "destination expert" who can meet many transportation-related needs.

The old analogy of a freight forwarder as a travel agent for freight is changing into "destination expert" who can meet many transportation-related needs.

Major changes in the role of freight forwarders center on information technology and financial management. Whether executing a letter of credit or just verifying a delivery to start the payment process, financial flows are now closely linked to the movement of goods.

Security compliance is another major factor for anyone involved in global trade. Importers and exporters require smoother transit at borders and need to ensure compliance with security rules in an ever-broadening global marketplace to avoid any slowdown in the flow of goods. This is extending to closer relations with the forwarder in the origin country on imports as well as with an export forwarder's office or agent in a destination country.

Trade compliance isn't the headline grabber that security is, but it can cause just as many problems. Global customs officials are as vigilant as ever, and mistakes can delay or stop shipments. With more global shipments (from origin to a third-country destination), a broader knowledge of trade compliance issues is important.

Regulatory compliance in destination markets in particular has become a thorny issue. Environmental impact rules may require a reverse logistics plan to remove products at the end of their life cycle. Packaging restrictions may also come into play, as in the recent wood packaging restrictions. Other rules might restrict products to protect local markets.

Supplier compliance is rising in importance as supply chains are stretched geographically. Importers without a local presence in a source country need to know what is happening at source plants and may even need to have an agent involved in monitoring production deadlines as well as assisting with logistics between the plant and the port. All of this is in addition to the conventional forwarder roles of consolidation, building loads and booking space on a vessel or aircraft.

Customer compliance has expanded from meeting delivery deadlines to include making goods retail ready, kitting, packaging and labeling, partial assembly and other value-adding processes.

Pat Moffett, vice president of global logistics for consumer electronics maker Audiovox, says a few years ago he questioned whether consolidation in the industry would eliminate smaller freight forwarders. But despite the rising complexity of global trade, he still sees a role for smaller forwarders who can provide personalized service or serve a niche market. And, he comments, judging by the number of such forwarders contacting him, that sector is growing.

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