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July 2022 Freight Forwarder Update

Supply chains have dealt with unprecedented delays over the past few years, and while things are nowhere near back to normal, there was an increased level of anticipation that things were heading in the right direction.

It seems that hoped for future might not be in the cards thanks to new regulations around green shipping initiatives. Partly because shipping companies don’t have clear insights into what fuels to use in the future, so they’ll continue to operate using older vessels. If so, they need to make sure those vessels are more efficient, which could translate into lowering the speed they sail at—meaning slower shipping times.

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Shipping costs have soared since 2020, some reports saying as much as up to 300%, to the point where increased costs surpass the profit from goods. All of this started with the pandemic, but global tensions, such as Russia’s invasion of Ukraine, are making their mark on the industry. Nearly every European port has stopped handling containers to or from Russia.

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For some good—or at least better—news, the latest report from the ICC International Maritime Bureau (IMB) shows January to June 2022 has had the lowest incident rate of piracy since 1994.

The 58 incidents—compared to 68 in the same time period last year—included 55 boardings, two attempts, and a single hijack. However, it’s not the time to be complacent, given the high number of boardings, many of which were in the Gulf of Guinea as well as in the Singapore Strait.

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There’s been a lot of talk lately about super-sized container ships and a bigger is better mentality. But this year, at least in commodity trades, it’s smaller ships that are outperforming.

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Finally, in air cargo news, Shanghai is reporting that it’s business as usual for their airfreight market, despite another troubling rise in COVID numbers. However, delays could be an issue.

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June 2022 Freight Forwarder Update

Here are some of the top stories freight forwarders and shippers should be watching.

Early this month, the FMC released its final report on an investigation into container shipping throughout the pandemic. Commissioner Rebecca Dye has announced three new initiatives to help shippers. These are the International Ocean Shipping Supply Chain Program, reestablished Export Rapid Response Teams, and the designation of FMC Compliance Officers.

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Some ocean carriers are making a deeper dive into the air cargo business, specifically, CMA CGM and Maersk.

CMA CGM has received its air carrier certificate from the French Civil Aviation Authority and has 2 new Boeing 777 freighters to get them up and flying from their new base of operations at the Paris-Charles de Gaulle International Airport (CDG). They hope to double their air fleet of 6 by 2025.

As for Maersk, they have finalized the acquisition of a $644 million freight forwarding company, Senator International, based in Hamburg, Germany. The company specializes in business air freight shipments.

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You’ve probably heard that Amazon has finally launched its drone delivery service, but what does this mean for the shipping industry at large? Some feel that it could significantly change the industry and that the drone market will triple by the end of 2024. When you consider that drones are eco-friendly and can carry a maximum capacity of 4,500 pounds, they may be right.

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So who’s to blame for US inflation? According to President Joe Biden, it’s the global shipping alliances. These three alliances control about 80% of the world’s shipping container capacity and according to Biden, over the last few years they’ve raised their prices by as much as 1000%, which he says is a “rip-off.”

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Finally, chokepoints have been identified as another vulnerability in the supply chain. Chokepoints in shipping lanes are both man-made and natural, and since about 90% of trade goods traveled by ocean, a lot of it vital supplies, they represent a valid concern. Especially since shipping is a significant factor in the global economy.

Goods can travel through multiple connected chokepoints across global supply chains. If one is blocked, others can be affected—and they can be affected by a variety of situations. These include terrorism, cyber events, political and military campaigns, and more.

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May 2022 Freight Forwarder Update

Here is the latest news freight forwarders need to know.

As if things aren’t bad enough, the shipping industry is facing another threat, at least according to the 2022 Safety and Shipping Review by Allianz Global. The annual review analyzes incidents over 100 gross tons and assesses future risk challenges.

Despite the fact that total losses declined in 2021, the number of shipping casualties or incidents rose. In total, there were more than 3000 incidents, including machinery, collision, and fire damages.

The war in Ukraine, results from the shipping boom, which includes port congestion and extended working life of vessels, add further pressure.

Click to Read: Shipping Losses Decline, but Emerging Risks Challenge Industry

Indicators point to a slowdown in the shipping industry later this year. Still reeling from the turmoil of the last two years, supply chains are dealing with an unusually strong start to the year. But thanks to the ongoing war in Ukraine and China’s COVID-19 restrictions, the industry is facing further pressure.

And it doesn’t stop there. A weakening global economy plus the above-mentioned issues will slow industry growth and delay any significant recovery in supply chains.

Click to Read: Global Shipping Trims the Sails Heading into Economic Slowdown

A year-long commitment—a Memorandum of Understanding (MOU)—has been signed between the International Chamber of Shipping (ICS) and the Suez Canal Authority (SCA).

The two parties have agreed to increase the amount of information shared and their negotiations on how global trade moves through the Canal. It will also address issues such as toll pricing, environmental protections, and decarbonization.

Click to Read: International Chamber of Shipping and Suez Canal Authority Sign Landmark Agreement to Enhance Cooperation

Going, going . . .  green.

There’s lots of legislation in place to meet environmental goals in the industry, however, new milestones may soon be met. The European Union Parliament’s environmental committee is voting on the inclusion of shipping in the EU’s carbon market, with potential ratification by the end of June.

Click to Read: Another Important Week in Shaping International Green Shipping Legislation Gets Underway

Rising fuel prices could soon impact everyone. With a jump of 51% in the price of diesel since the beginning of the year, economists are warning of the possibility of a US recession in 2023.

It’s expected that at some point in the near future the higher cost of fuel will be rolled into the price of all consumer purchases, including groceries

Click Here: The Climbing Price of Diesel Is Raising the Risk of a Recession

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Freight Forwarders – Which of These 5 Problems Is Costing You Money?

As a freight forwarder, you know the logistics marketplace is competitive and very price-driven. This means any opportunity to improve your margins is a good thing. You also understand everything in shipping is urgent, making time yet another constant pressure on you and your company’s operations.

You might not face all 5 of these problems—but chances are you’ll be very familiar with at least a few. Just fixing one of the following can provide a massive boost in productivity to your operations. What you need is the best freight forwarding software to get you on the right track.

Problem #1: Taking Too Long to Quote

You get a request for pricing regarding a multi-modal freight movement, and they need it yesterday. Without a process to access and calculate all-in rates, it can take hours or days to get back to the customer.

Chances are, in that time, the customer has spoken to other freight forwarders and received at least a few competitor quotes. Many times, it’s the first to quote that wins the business.

Problem #2: Freight Rates Aren’t Current

Speaking of quoting customers, to do that correctly, you need accurate rate information.

Yet, in logistics, you’re usually dealing with tariffs that are already obsolete. That’s not because most logistics people are lazy, but because freight rates (especially ocean tariffs) change every few weeks or months. This makes calculating freight costs accurately impossible if you don’t have the latest rates available.

Problem #3: Cannot Balance Cost and Service

Sometimes, the lowest cost options do not lead to the best solution. Many forwarders quote higher for shipments than they should and with longer transit times than necessary.

This is mainly because they can’t easily determine what the best options are. A process to optimize cost and service when quoting customers is important to putting your best foot forward and winning more business.

Problem #4: No Centralized System for Managing Freight

If you have multiple locations that exist as separate operations from a rate and contract management standpoint, you’re losing efficiency.

This is because it probably means you’re also managing separate carrier tariffs and operating under different procedures—and in many cases, doing the same work twice for no gain. A centrally managed, single software to handle freight rate management will give you better control and consistency.

Problem #5: Losing Money on Invoice Errors

Shipping generates a lot of invoices—and messy ones at that. It’s a necessary portion of the business, but never an enjoyable one.

There are regular overcharges and other errors that are common on freight invoices. But unless you’re investing staff time into reviewing them, or have a system that automatically checks for errors, you might as well have a hole in your pocket.

GAMA Tools Solves These Problems

Instant quotes. The ability to compare all-in rates for any freight move with 99.7% accuracy. A centralized system so you can manage ALL your freight rates and contracts, plus a process that checks invoices for inaccuracies.

It’s easy to see how these tools instantly eliminate all the above problems and provide incredible cost savings for your business.

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How To Pick the Right System for Your Logistics Technology Stack

Today’s leading companies have come to recognize the value and growth logistics technology can bring to their shipping operations. Even the most progressive companies, however, may fail to understand how adopting a comprehensive, automated solution extends beyond simply integrating a standard TMS.

While a TMS can offer a wide range of benefits on its own, improving service, keeping your customers happy, and staying ahead of the competition often requires a unique combination of many different tools. This is where your logistics technology stack comes into play because data is key. If you want to maximize the use you get out of your TMS and completely alter your end users’ experience for the better, you’ll need to look outside of your existing system for additional opportunities that can provide richer data sources and other useful functions.

Filling in the Blanks

Thanks to modern pre-built API and EDI connections shippers are now able to easily integrate a variety of data points ranging from up-to-date tracking information, to reliable capacity, to accurate rates. At the end of the day, a TMS can be pretty powerful, but without the right data to back it up, you could be leaving room for significant gaps within your supply chain processes. Specialized logistics technologies help to solve for this lack of visibility by filling in the blanks that are critical to a shipper’s success.

The best shipping software will get you a lot more than lower rates, including simplified online booking, hassle-free invoice payment options, real-time tracking, data-driven decision making, and optimized workflow digitization. And with the resources that are currently out there on the market, achieving all of this is a lot less complicated than many people tend to assume.

The reputation new technology integrations have within this industry of being costly or time consuming is far from the truth. This wasn’t always the case, but sharing data between systems is much easier now with the support of consistently evolving technology that prioritizes ease of use and enables advanced communication. Logistics technology providers want to deliver a seamless user interface just as much as shippers and their customers want to experience one.

Here are some of top applications shippers need to keep an eye out for an immediate ROI:

  • Real-time freight tracking
  • Top-of-the-line CRM solutions
  • Dynamic contract rates
  • API or EDI connectivity

A TMS is a fundamental tool and a great start to building an ideal technology stack, but it’s also become the bare minimum. As logistics technology continues to advance, creating a balanced blend of software solutions can actually be fairly affordable for most companies. Smart shippers know that it takes more than just the basics to wow their customers, but they may not know how to identify the investments that’ll get their unique business the optimal results. Don’t worry though—that’s why we’re here. Click here to learn more about how GAMA’s software can help shippers cut costs, minimize mistakes, and increase efficiency.

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Here’s Why Every Freight Forwarder Needs a Comprehensive Customer Rate Inquiry Tool

GAMA’s leading Rate Inquiry Tool allows a forwarder’s shipper customers to submit rate requests directly to you, simplifying the entire process.

The tool is about more than just providing rates, however. It is a powerful, centralized platform that improves rate and cost management for both forwarders and their customers.

For shippers, GAMA’s advanced technology provides a way for customers to collect valuable logistics data and turn that information into actionable KPIs for their organization. The features will not only provide more visibility into their supply chain operations but drive more efficiency and savings for them as well.

For forwarders, it’s a way to better manage rates and margins, as well as communicate with agents, vendors, and other supply chain partners in one convenient location.

Here are some details on how it works:

The process and user interface are simple to understand. After your shipper customer selects the mode of transportation and identifies the general services their freight requires, the next section (titled Cargo Details) offers a place to specify cargo dimensions and special equipment needs. To complete a request, users can check any other box listed under Additional Services to ensure all shipment details and requirements are accounted for.

From your perspective as a forwarder, GAMA provides complete control in very important ways. Administrators have access to every rate request pending vendor and customer input. By gaining transparency into each individual request submitted by all of your clients who utilize this tool, you can leverage newfound insight into the customer quoting process.

On top of having the ability to immediately select and send cost requests to your agents and other individuals throughout your vendor network, our Suggested Vendors screen also automatically pulls information from your saved vendor database. Choosing the most suited agent for a job is made simple, so you can be assured your customers are receiving the best rates and service options available.

Here are some additional GAMA feature highlights for freight forwarders:

  • Build your customer’s rate based on the info provided in the Rate from Vendor section
  • Search carrier vessel schedules to offer up-to-date sailing data
  • Add any necessary markups based on either percentage or value and apply them to the selected lines
  • Create Quote Templates that include a place for you to identify varying types of charges and your company’s own fees
  • View the total amount broken down into buy/sell rates as well as the expected profit per agent submission

From allowing you to submit all vendor rate and service options for your customer to select the one that works best for their business, to offering a complete breakdown of charges and feedback, to providing total transparency to your customer base, to enabling you to instantly book shipments online with the Look-to-Book feature, GAMA’s customer Rate Inquiry Tool will strengthen your customer relationships and improve the profitability of your forwarding operations.

Visit GAMA to learn more.

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How To Identify Online Self-Service Freight Management Portals That Guarantee an Immediate ROI

Transparency and reliability are two of the most important qualities freight forwarding operations need to have in order for forwarders to meet the rising expectations of today’s marketplace and effectively manage a post-pandemic shipping environment. When the only thing that’s certain about the new supply chain norm is how uncertain we are about what lies ahead, it’s crucial to be able to differentiate your services and keep your customers satisfied.

This is why more and more forwarders are adopting online self-service freight management portals that offer customers and other users direct visibility and access to rates, shipment information, and important documentation. Given how many variations of these software platforms there are currently on the market, here are some of the top functions logistics professionals need to look out for to ensure they’ll get the most value out of these tech investments:

• Instant access to competitive contract rates

International shipping rates are always complex. Managing rates and keeping on top of surcharges and fees that are constantly changing is impossible without the right system to oversee it all. Search for an ocean freight management system that will deliver the competitive contract rate transparency you need, as well as the ability to create accurate quotes in real time.

• State-of-the-art customer relationship management services

You don’t want to waste your time on customer information that’s not current or accurate. This specific feature can help forwarders prioritize the right people by ensuring their data is up-to-date and automating most of their basic administrative processes. Since data entry no longer has to be so time-consuming, you can help your business avoid having to devote valuable company resources to more simple tasks, like sending follow-up emails or scheduling calls.

• Seamless API/EDI-enabled integration process

Some freight forwarding software may need additional support from third-party systems, which is why you should verify whether or not the technology can be easily integrated with other software. It’s critical that forwarders trust the reliability of their freight management systems because no one wants to be stuck with something that’s a nightmare to implement.

• Real-time tracking capabilities

It’s essential to know where your freight is and when it will arrive. Keep in mind that all freight management systems don’t have the same level of real-time tracking capabilities. For example, software with basic tracking functions may still require you to manually add and check freight information. More sophisticated software, however, can notify you and your customers of important updates without any effort on your part.

Investing a little into the right software for your freight forwarding company can go a long way. Don’t take too much time to debate over this decision, however, because you’ll only get left behind by the competition. Once you integrate a solution that’s capable of managing all of your forwarding needs, the ROI will follow soon after.

Click here to learn more about how leading software solutions like GAMA’s can help you enhance the customer experience by reducing errors, cutting costs, and increasing productivity.

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Five Challenges Facing Freight Forwarders Today

Freight forwarders need to be as concerned about the future as any other type of company—there’s a lot happening in the shipping industry these days. In fact, it’s hard to think of another industry facing more uncertainty considering the number of macro-trends happening with global supply chains right now. These challenges include everything from the pandemic fall-out to the impact of technology.

Macro and global issues aside, there’s also plenty going on within the industry that freight forwarders should be watching.

Here are five important things happening right now.

Competition Is Fierce and Growing

Freight forwarders are facing stiffer competition than ever. Part of the reason is that many logistics service providers that have defined themselves as something else (such as an ocean carrier, or even a warehousing company, for example) are also providing forwarding and NVOCC-type services.

It seems even Amazon is getting in the game—which leads us to:

Commoditization Is Unavoidable

Shippers often view transportation as a commodity. All most care about is that deliveries are made. So, they place a small amount of value on service and a lot on the price. This makes it hard for logistics service providers of any type to differentiate themselves from others—especially when there are typically a few who’ll simply try to win on price alone. Some forwarders are learning they can better compete by offering new or better technology that improves the customer experience.

Ocean Freight Market Volatility

Ocean shipping is a central part of what forwarders do and the value they provide to customers. As the last year has shown, ocean freight is also a very unstable business. It’s based on complicated rates and contracts, that in some cases, take an actual expert to understand. The result is that even forwarders find it hard to understand their cost structure—which, in turn, makes it even harder to provide customers with accurate and reliable quotes. And the seemingly random nature of price increases and surcharges only exacerbates the challenge for all companies.

Bid’s and RFX’s

Many forwarders also rely on tenders as a source of new business. Because the volume of these bids can often be extremely high and complex, tenders take a lot of time and resources. Forwarders who are on the leading edge focus on improving their internal process to make sure they can bid accurately and quickly while placing the most attention on the best types of business for them.

Rates of Change

There are always new market challenges that providers need to be accounting for. An example that many could say has made the pandemic even more disruptive for supply chains is the trend for ocean carriers to form alliances. Today, with almost no notice, the rates and contracts forwarders have with the carriers can change, as well as their service.

The good news is that logistics technology, when applied correctly, can change how forwarders manage their business and service their customers.

As the industry sits today, freight forwarders need to work hard to make their company stand out. The leading NVO’s and forwarders know that competitive rates matter, but so does providing customers with more and better service options and technology that creates a positive customer experience.

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How Technology Protects and Grows Margins for Freight Forwarders

Freight forwarding is about margins. There is, of course, a lot that goes into being a successful forwarder, but with no margins, there are no profits. This means your ability to protect and grow margins is the key to your company’s success.

This does not mean forwarding is only about low rates. Smart companies know that competing on price alone is not sustainable, even if it may provide some short-term victories. Providing faster and better service helps you differentiate yourself and charge more—and ultimately improve your margins.

Despite many hurdles preventing its wider adoption, it’s not surprising that technology is proving to be the best way for forwarders to take on this challenge of differentiating their service while maintaining strong margins.

Here are 5 ways technology can fulfill this promise:

Technology helps to provide a better customer experience. Forwarders can use technology to improve how they interact with customers—for example, enabling them to look up rates and book shipments online. This, as opposed to the old-school process of requiring customers to call you and then wait hours or days for quotes. All the information they require is available—technology just makes it possible.

Technology enables forwarders to be more confident in their costs and, therefore, their quotes to customers. Being sure of their cost basis, which is especially hard with international shipping, is key to reducing risk while still being to provide the most competitive quote possible. Rate accuracy matters and accurate quotes are impossible without technology supporting the rate management and rate calculation process.

Technology also does the obvious—like helping to automate manual tasks and processes within the forwarding operation. Although the industry is often criticized for relying too heavily on phone calls and faxes, leading forwarders leverage technology to eliminate these manual steps and digitize as much as possible—all with the ultimate goal of improving their customer’s experience and protecting their margins.

The flow of information also improves with the use of technology. Challenges inherent to international shipping like documentation and customs paperwork are more easily managed. Data and paperwork are completed and shared more efficiently with lost paperwork rerouted quickly and problems resolved faster.

The benefits are not just for forwarder customers either. Suppliers benefit from these types of improvements as well, which help margins in other ways. For one, carriers prefer to work with forwarders whom they know operate efficiently. Knowing this, they’ll give those forwarders preference with rates and service, knowing the company is easier and more reliable to work with.

Freight forwarding is a competitive market where margin protection and operating efficiency are a priority for everyone. Technology and its application by freight forwarders is a key tool for achieving these objectives while at the same time differentiating service performance.

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Using KPIs To Improve Profitability and Customer Service

The idea of Key Performance Indicators (KPIs) isn’t a new thing. It’s not uncommon for shippers to use KPIs to quantify service levels from you as a freight forwarder and their other carriers.

KPIs should be a vital part of managing the performance of your suppliers as well. You may not be a shipper in a literal sense, but it’s important that you manage your carriers against the same benchmarks you use.

In fact, discussing KPI measurements with your customers and suppliers should be a regular practice. It’s a mistake to wait for customers to approach you first—proactively talking about service performance (whether good or bad) is important to strengthening long-term relationships. KPIs are a straightforward, objective way to measure how your suppliers are doing.

Typical KPIs include a considerable amount of delivery and service-based metrics, which are clear indicators of performance. On-Time Delivery, for example, is vital no matter the circumstances.

And while not as common, but also of import, are KPIs related to financial measures. Here are 3 types of KPIs you may not have considered before. They are important to your profitability as a freight forwarder and the service you provide to your customers.

Budget Versus Actual

In the past, it was typical for companies to set a transportation budget then not think about it again until the end of the fiscal year. Now, many shippers are monitoring costs in near real-time to enable faster action and control cost overruns.

Shippers also look to KPIs like Routing Guide Compliance and Tenders Accepted vs Tenders Declined, as well as Budget vs Actual as important barometers.

If shippers are exceeding their budget or trending unfavorably in any of these areas, understanding root causes and solutions is critical. As their vendor, the first call will be to you—and being prepared with the right data and actionable ideas is crucial.

Accounting For Variable Costs

Accessorials, surcharges, and fees all present a unique challenge. They’re costs that will happen, but it’s hard to predict when and how often. Detention, Unloading, and Lumper Charges are common examples of these types of costs. Many companies track Accessorials as a % of Freight as a KPI to identify problem trends.

Historically, it’s been tough for shippers and forwarders to closely track these charges. Many now use integrated rate management tools that enable better visibility—and therefore better management—into these types of variable costs.

Administrative Costs

Today, transportation managers are more actively involved in monitoring their freight payment process, knowing freight invoicing errors can add 5% or more to their total logistics spend. However, freight audit and payment can be a tedious manual process, as is dealing with OS&D issues and freight claims.

Helpful KPIs include Number of Freight Claims and Invoice Accuracy. Both are a way to monitor carrier quality and safety. Each KPI is a key step in tracking expenses correctly. Again, it’s access to the right data and supporting technology that makes this possible.

As a forwarder, what’s the best way to manage these new KPIs?

There is a common thread with all these measurements, and it starts with data. Most meaningful KPIs require access to cost and shipment information that’s timely and accurate. This doesn’t happen without the right process and the right technology.

Forwarders implementing an integrated technology solution that includes accurate rate and shipment information gain visibility into vital KPIs. These forwarders consistently exceed the expectations of shipper customers while improving service levels from their own carriers and suppliers.