Strategies for Becoming a Forward-Thinking Freight Forwarder
As freight forwarders have consolidated over the last several years, smaller freight forwarders have had an increasingly difficult time consolidating goods. The consequences for them can be dire: without creative and strategic thinking and planning, they will simply not be able to survive. Leveraging technology, key partnerships and strategic collaborations have enabled small freight forwarders to compete and to think about consolidation without losing independence. Freight forwarders who are open to change, receptive to technology and thoughtful about collaborative partnerships will get ahead while those who resist will not survive.
I have spent 30 years in the industry and have synthesized the most salient ideas for forward thinking freight forwarders in 2024:
Play the Long Game: Short sighted freight forwarders who are looking at gross margins on a shipment-by-shipment basis are going to miss out. Defragmentation of all the different parties involved has led to a lack of focus. For example, if a customer has a weekly Dallas to London one ton shipment, they may use six different providers depending on who gives them the best rate. Forward thinking forwarders are building partnerships not based on one week’s rate, but rather on longer term partnerships that provide better rates in the long run and in aggregate. Innovation calls for zooming out to 30,000 feet, thinking about all of the components of moving freight, and aligning with key partnerships to create optimization - not optimization for an individual shipment.
Be Open to Change: There is a categorical lack of trust and aversion to change in the industry which fundamentally hinders strategic thought and collaboration. A lack of trust and rapport and a lack of accurate data in transit time fundamentally precludes gross margin optimization. Misguided “best practices” driven from detached Ivory Tower “thought leaders” preclude gross margin optimization and creates incentives for one off, transactional decision making. Forward thinking forwarders will think in terms of strategic alliances to drive margin up and drive costs down.
Embrace Green Energy Mandates: The pressures of green energy are good for business and good for the environment. Fundamentally, fewer planes will be in the air if green energy mandates are followed. Eliminating the need for half empty planes flying around will benefit the bottom line. Green mandates translate to maximizing capacity that is otherwise underutilized. Receptivity to these changes will benefit small forwarders the most.
Think Big Picture: Planning for air freight complexities is easier with consolidated freight. Consider ULD shipments - they are less likely to be bumped on a planned route. There is a deeper capacity to plan better and to create more consistency in transit time, and an easier ability to reduce damage for shipments handled at the ULD level and not at the palate level (reducing loss, forklift damage, etc). Net net - planning at the big picture level has benefits that are not limited to price and the environment - it’s actually better for the end customer as well.
About Aircon: Aircon is a freight consolidator leveraging technology to bring flexibility and enhanced customer service to freight forwarders, thus enabling them to better keep up with the massive forwarders who have been eating their lunch.
About Chris Condon: Chris is the Co-Founder and CEO of Aircon and a frequent contributor to industry publications as a thought leader. He has 30 years of experience and a forward-thinking perspective that has enabled him to bring creative and strategic solutions to small freight forwarders.