Contract logistics and freight forwarding continues to be a thriving industry. Although some experts are of the opinion that the growth of logistics management sector can somewhat slow down, the rate of slowing still would not be able to prevent the sector from outpacing global GDP. However, companies offering freight forwarding services will nevertheless, need to handle several issues in the coming years.
The key towards profitability and growth of any freight forwarding company depends on how well it can analyse client requirements and respond quickly using advanced & differentiated solutions. This, however, necessitates improved technological tools for augmenting the efficiency of internal process and generating analyses that lead to deeper comprehension of customers’ businesses and industries.
In emerging economies, clients entering new markets generally demand something other than traditional warehousing and transportation services from contract logistics experts and freight forwarders. Nowadays, the biggest differentiator is the ability of a shipping firm to provide value added services like returns management, warranty processing, light manufacturing, transportation & trade management and insurance & customs brokerage. To be exact, most logistics management companies are attempting to become one-stop solutions providers in order to capitalise over cross-segment opportunities and achieve differentiation.
There are plenty of risks that shipping firms have to face all the time, especially due to continued stability of global economy. The most prominent of them all is rising prices of oil. Another challenge is political unrest across several regions of the world. To top it all off, there are also the economic barriers within European Union. Besides that, a few natural disasters have also exposed the frail nature of logistics business.
As per extensive research, following are some of the threats that are slowing the growth of the freight forwarding industry:
- Negativity about opportunities of growth in the realm of air freight, particularly in the Pacific-Asia region.
- Continued overloading in ocean freight due to declining shipping rates.
- Persisting pressure over logistics management rates as profit growth is restricted to volume growth.
However, not everything is going south for the sector. Demand is skyrocketting for enhanced logistics capabilities as well as industry-focused solutions. In addition to that, the growing capacity of assembly plants in several markets has had a positive impact on the dynamics of logistics business. Firms are responding to economic and market pressure as well by reforming their organisations, centralising management, sharing facilities and consolidating functions & service providers.
