With changing time and increasing customer’s expectations, businesses are working hard to meet the demand of the current market. The same is true for the freight forwarding industry too. As compared to earlier, today, people expect delivery in the least time possible. They want to track their order and want to get informed of every detail- from placing orders till final delivery. The freight forwarding sector is thus worried about the changes and the future as other industries. The uncertainty and confusion brought by the new macro trends demands for more efficiency and advancement.
Amid all this, freight forwarders are facing an increasing number of challenges that keep growing as the years go by. The outbreak of novel coronavirus has poured butter on a burning flame by increasing the challenges faced by the freight forwarders.
In this article, we will be talking about the basic challenges being faced by them
Bunker Surcharge Fluctuation: Bunker fuel is the generic term given to any fuel poured into a ship's bunkers to power its engines. For crude tank companies, bunker fuel is a huge cost. It is highly polluting, crude, and viscous. Not all engines can handle this type of oil as it needs to be heated before using it. Only the ships with large engines can use Bunker oil. Freight forwarders whose carrier partners do not own large ships often get into the problem. When the oil prices in the international market fluctuate, its direct impact is seen on forwarders. The high cost of fuels directly hampers the freight transportation rates leading to the problem of credit and increasing inflationary demands.
The freight forwarder and shipping industry were to face another biggest challenge due to the regulation of IMO 2020 when COVID-19 hit before it. IMO 2020 regulation was made in order to cut the emission of Sulphur Oxide from the bunker fuel. Crude oil contains sulphur which, following combustion in the engine, ends up in ship emissions. Sulphur Oxide is very harmful to living beings that cause respiratory problems and lung disease. In wake of this, the IMO 2020 was all set to be implemented in March 2020. All of this not just impact freight forwarders but also other personnel engaged in shipping activities. But this is somewhat important for sustainable growth and development.
Changing Government Regulation: Government changes its norms and regulations from time to time to bring better practices in action. The changing regulations imposed on carriers by the federal, state and local authorities come to be disastrous sometimes for shippers and forwarders. These regulations are stringent, and non-compliance to them can cost the carriers a lot of money in the form of penalties which adds to the whole cost problem.
Freight Forwarding Cost: One of the most challenging aspects of importing from Asia is the constant uncertainty of the rates. The cost of freight forwarding is not always constant. It keeps changing due to various reasons. Every day, the exchange rate of dollars fluctuates. Since the US dollar is the common currency used for international trading, a slight fluctuation affects the freight forwarding rates. Also, when expensive payment methods are used like bank transfers, they involve hefty fees that are added to the total expense.
Different countries have different tax, excise duty, etc to be paid at the port of origin and port of destination. This causes some ships to remain at the sea due to heavy service charges or docking charges. These charges vary from port to port, and since there are no standards, it becomes a big problem. Due to all this, freight forwarders face losses by losing customers or by getting paid less, etc.
Season: The season has a significant role in disturbing freight rates. In any business, you will hear the term- peak season/high season and low season. The high season is recognized with the increasing demand for freight forwarders for cargo transportation while the low season has a normal demand. With an increasing demand curve comes the high season and goods become highly expensive to ship. Besides, the rise in the cost of goods, there is also a rise in the cost of freight.
Another way that season affects the freight forwarders’ work is the bad weather. Due to strong storms, heavy rain, a lot of smaller ships remain docked and lose out on businesses. The freight forwarders who have contact with shippers who own large ships often get escaped from this because large ships can overcome the bad weather and maintain the safety of the cargoes. Bad weather damages cargoes and ships as well. That adds to consolation fees and ship maintenance charges respectively.
Driver Shortage and Retention: The freight forwarding service relies highly on the trucking industry to move goods to the final location. Because of the uncertainty enveloping the shipping industry, there is seasonal hiring and firing which goes on. Due to this reason, people are afraid to get employment in this industry. Thus, a shortage of trucks or drivers creates another chaos for them. Although trucking companies have moved to make the job more attractive to younger people, women, and ex-military personnel, the shortage still exists.
Container Capacity: The cargoes cannot be loaded beyond the maximum capacity limit provided by it. Each shipping container is designed to be used to a certain capacity. If the container is not filled to its maximum limit the shipper bears the cost of the remaining space. This further increases the cost of freight transportation. And it comes on freight forwarders to get a customer ready for additional charges or at the end, it’s the forwarder who ends up paying for extra charge. In such cases, by using FCL (Full Container Load), you can escape from the additional charges.
Another way through which you can be relieved off this issue is by using BOXXPORT.com. BOXXPORT.com is an open market place allowing people from all across the world to sell and buy containers online. Through this, you get a way into the world of thousands of containers of different types and dimensions. It provides an easy container acquisition process due to its global reach and real-time information about stock availability, price fluctuation, and port location, etc.
Conclusion
The world is rapidly changing and with change comes the challenge. And its challenges what makes freight forwarder stronger making them more capable for future contingencies. And to reduce freight forwarder problems to some extent, we at BOXXPORT.com have been helping them for years with an abundance of shipping containers tradable online. Let us know your need and we would be glad to serve you.