15 Mar 2024

What Sets Successful Freight Forwarders Apart?

Here are 7 ways stand out from the competition.

Building a successful business in a competitive freight forwarding industry is anything but simple. However, there are ways to stand out from the crowd by setting your operations apart. Here are some strong practices commonly employed by successful freight forwarders:

1. Competitive Pricing

When customers choose a forwarder, price often plays a significant role. Typically, the lowest bid or the most competitive price wins new business. Therefore, freight forwarders must price their services based on the pricing models of their direct competitors. However, it is important to avoid setting prices too low and unreasonable, as this may suggest a lack of expertise. Striking a balance between value-added services and differential pricing is crucial for attracting new clients and retaining existing ones.

2. Cost Efficiency

Increasing selling prices may boost profits, but reducing costs and maintaining larger profit margins is a more effective solution. To achieve cost efficiency, freight forwarders must carefully analyze and identify which operating and overhead costs can be reduced through elimination, modernization, or digitization. Streamlining processes and negotiating contracts with key stakeholders and liners can also contribute to cost-effectiveness.

3. Extensive Expertise and Global Network

Customers turn to freight forwarders for their extensive network and expert advice, which adds value and helps retain clients. Building a successful reputation relies heavily on this aspect. It is crucial for freight forwarders to collaborate with trustworthy and reliable forwarding affiliates, as working in isolation is not feasible. Expertise in comprehending and mitigating logistical risks is essential for sustainability and success.

4. Multi-modal Solutions

In today's shipping landscape, a single shipment can reach its destination through various modes. Freight forwarders should be flexible in providing clients with multi-modal solutions and advising them on the best options. Having backup plans in case of disruptions on the main route is also important. Developing flexible solutions across different modes and timeframes enhances cost-effectiveness, reduces time and effort, improves efficiency, and ensures a seamless transportation experience from pick-up to final delivery.

5. Financial Stability

Logistics can be costly, which is why clients look for forwarders with solid financial stability when choosing vendors. A forwarder's financial stability provides a buffer for stakeholders and players in the supply chain, helping to build stronger logistic networks. Additionally, a forwarder's credibility in the market increases with the credit facility they can offer, ensuring uninterrupted supply chain operations and avoiding payment-related disruptions.

6. Technological Advancements

Manual processes hinder the efficiency of the supply chain network, making digital innovation crucial for eliminating manual intervention. A user-friendly website, comprehensive transportation management systems (TMS) and risk management systems (RMS), and interactive customer relationship management (CRM) solutions serve as the foundation for a successful forwarding agency. These platforms ensure the secure, encrypted, accurate, reliable, and timely handling of data, facilitating smoother deliveries in the fast-paced global environment. They also provide visibility and value for both the forwarder and the customer.

7. Streamlined Customer Experience

As with any business, prioritizing the customer is essential. A customer-centric experience, where issues are promptly resolved and customers receive distinct advantages, helps expand the customer base and increase the forwarder's market share. Customers prefer solutions that address their concerns and provide accurate and reliable information readily accessible to them. Visibility throughout the transportation process is crucial to keep customers informed about the whereabouts of their goods.

How can freight forwarders effectively integrate these solutions?

Implementing these strategies into an existing business setup may pose challenges, as change can be difficult to accept. However, a gradual incorporation strategy allows for a change management routine that strengthens both staff and technical capabilities.

A clear business plan that incorporates these strategies should be the initial step toward success. It is crucial to avoid simple mistakes such as losing focus on the end goal, neglecting customer needs, and underutilizing technology or expertise. By prioritizing client experience, effectively managing resources, constantly tracking shipments, and increasing agility, freight forwarders can differentiate themselves from competitors.