Businesses looking to export or import goods have a multitude of logistics to consider and undertake. Having worked in the area of international supply chain management for an action-sports apparel and accessories company, I can say that monitoring such a vital and susceptible activity involves lengthy spreadsheets, numerous e-mails, and continual phone calls. Luckily, there is an entire industry dedicated to the movement of freight into and out of the United States: freight forwarding.
Freight forwarders are the behind-the-curtain orchestrators of all things international trade. Export.gov provides a section dedicated to understanding the pivotal involvement of such firms, detailing their services as:
• Advising on exporting costs including freight costs, port charges, consular fees, costs of special documentation, insurance costs and freight handling fees;
• Preparing and filing required export documentation such as the bill of lading and routing appropriate documents to the seller, the buyer or a paying bank;
• Advising on the most appropriate mode of cargo transport and making arrangements to pack and load the cargo;
• Reserving the necessary cargo space on a vessel, aircraft, train, or truck.
• Making arrangements with overseas customs brokers to ensure that the goods and documents comply with customs regulations.
So, you may ask, who are these mysterious entities know as freight forwarders? Well, while they do perform their functions during all hours of the day in ports across the country and world, they don’t wear black pajamas to get things done. Rather, they are enormous multinational companies, some of which are household names, that excel at handling the logistics and balancing the dynamic variables of transporting cargo by sea, air, and land.
In a 2013 article, Patrick Burnson listed the top twenty-five global freight forwarders by revenue and volume. While the top twelve are below, the remaining thirteen can be found here.
Burnson’s piece also provided a glimpse into the impressive size of the freight forwarding industry overall. For instance, in 2012 sea shipments grew by 11.5% to $63.23 billion, and while air cargo dropped by 4.2% to $62.62 billion, the main reasons for the decline were overcapacity and rising costs like those of fuel. In short, air shipment revenue was a victim of too much demand and a fluctuation of those dynamic variables mentioned earlier.
Of course, with the United States sharing borders with Canada and Mexico, exporting and importing by land, specifically by rail, has grown considerably since the start of the 21st century. A report by the Federal Railroad Administration stated that the value of goods transported by train from and to Mexico increased from $20.4 billion in 1999 to $64.5 billion in 2012. Over the same period, freight from Canada grew by 78% from $58 billion to $103 billion. While this method is dominated by large, heavy exports and imports like cars and coal, it is still a freight market that continues to expand, especially as the global economy strengthens.
Regardless of the mode of transport, freight forwarders must adjust their operations according to universal factors like capacity, rates and transit times. Just because sea shipments rose and air cargo declined in 2012, doesn’t mean the trend will continue as competition among and within freight markets evolves alongside customer demand.
In general, freight forwarding looks to grow by 6.8% before 2016. With this growth come the changing needs of companies relying on forwarders to move their goods in an expeditious and comprehensive manner. In another 2013 article, author Rob Knigge talked about the current concerns and developing demands of export and import customers and stated the following about using IT solutions to provide more clarity during transport:
Supply chain visibility remains a top operational priority for large customers. Customers generally struggle to achieve a unified picture of their supply chains because of the legacy information systems designed to operate within a single company, not across a network of companies. Thus, the ability to share real-time information with key customers, suppliers and partners has become critical in the freight forwarding industry.
Companies and their stakeholders need their supply chains monitored for harmful environmental conditions, as a prolonged negative situation could jeopardize the integrity of the assets being shipped. When not given the proper attention, irregular elements like humidity, temperature, and CO2 can destroy a shipment of imported products. Imagine how poorly a container of bananas would fare during an unexpected five-day, mid-July stint on the dock in Newark, New Jersey. Without any awareness or intervention, the value of those portable producers of potassium would evaporate in the cast iron cauldron heat of summer.
Using this insight as both a closing place of thought and a point of transition for our next discussion on particular regulations pertaining to shipping and shipping containers, it’s important to note that the last piece of this series will address the issues raised here by offering a customizable, cloud-based IT solution that can be deployed by freight forwarders or their customers alike.
Chris Monaco, Covert Content Creator
As a man of many achievements, Chris Monaco is Temperature@lert’s newest Covert Content Creator. Hailing from Beverly, MA, Chris is armed with a trifecta of degrees, from a BFA (Maine at Farmington), to an MFA (Lesley University), all the way up to his most recent achievement; the coveted MBA from Suffolk University. Outside of his academic travels, Chris has added many international stamps to his passport, including: Seoul, Korea and Prague, Czech Republic, wherein Chris taught English as a Second Language to dozens of international students. His hobbies include writing, skiing, traveling, reading, and the world of politics. His personal claims to fame include two cross-country car trips through the U.S. and a summer’s worth of courageously guiding whitewater rafting trips. Chris’ ideal temperature is 112°F, the optimal temperature for a crisp shave.