Future of forwarding industry: How does it look like?

Filed in archive Market Overview on March 6, 2007

Yesterday it was my lucky day and I got a free download of a report from Silver Bullet Technologies on the Forwarding Industry. Some of the insights in the report were quite valuable and I thought it might be intersting for you. That's why in this post and probably another one in the future, I will provide a summary of it. Enjoy!

What does the future hold for the freight forwarding industry as a whole, and for mid-sized service providers specifically?
"Globalization will continue to build and re-shape economies and companies," says Max ward, director of value chain development, DHL Global Forwarding, Hong Kong. "This is particularly true with regard to Asia, where companies are not only sourcing production but also are gearing up to serve that huge emerging market."

Shippers will want to off-load more and more of their logistics activities onto third parties. The demand for bundles of value added supply chain services will continue to grow. "The big companies want us to provide a bundled end-to-end value chain solution," Ward notes. The big integrators like DHL, UPS and FedEx are scrambling to realize this business model, often buying up smaller firms that complement their portfolio.

Where does that leave the mid-sized freight forwarder then? "There will always be a place for smaller forwarders," Ward
believes. "They may not be able to offer the fully bundled end-to-end service package that the big integrators do, but what theycan offer is a personal relationship and lower price."

The mid-sized forwarder, as well as its customers, must develop new skills for managing the supply chain. State-of-the-art business process software can enable these new skills, helping organizations move up the learning curve of managing global supply chains. They eliminate or curtail the risk of stock outs, ensure production continuity and reduce the excessive working capital required to support the bloated inventories endemic in old-style "blind" supply chains.