Is Your Freight Forwarding Business Going Away?
THE OLD MODEL IS SINKING!
The alarms are just now starting to go off. The signs are everywhere, the old business model that most forwarding companies are based on is starting to take on water. It's time for independent forwarders/logistic providers to seriously evaluate this situation and where this is headed. According to the 2016 Global Survey, THE FUTURE OF FREIGHT, the key changes to the industry are;
THE CORE SERVICES OF GLOBAL FORWARDING ARE NO LONGER DRIVING GROWTH
- "The core freight forwarding components - ocean, air and trucking, are significantly less profitable than other business operations." Margins in these core components will continue to erode, which puts the basic forwarding business model in jeopardy going forward.
CUSTOMERS ARE DEMANDING MORE AND THIS FURTHER EXACERBATES PROFITABILITY
- Customers are increasingly demanding transparency and solutions: visibility throughout the quote process, through freight movements, in all aspects of customer service, says Cathy Morrow Roberson, Founder and Head Analyst, LOGISTICS TRENDS & INSIGHTS. This trend is will only accelerate. The dramatic increase in logistics technology applications, and the drive for transparency will continue to undermine the old forwarding model of marking up ocean, air and truckings.
AUTOMATION IS POWERING GROWTH FOR EMERGING PLAYERS
- Large technology companies, like Uber, Amazon, Alibaba and others are moving into the logistics space at unprecedented speed. Last year, 2016, investments in Logistics Technology more than doubled from the year before to 5.5 billion dollars. Direct online carrier sales to shippers further eats into market shares, which is only expected to expand.
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