News
- Forwarders move to the fore
- 3/8/2010
Forwarders move to the fore
Katerina Kerr | Wed, 3 Mar 2010
Shippers placing greater value on forwarding services as supply chains become more complex
Shippers are increasingly looking to freight forwarders for their ocean, air and logistics needs, as relationships with carriers become more difficult and complex, according to a report by Drewry Supply Chain Advisors.Division director Philip Damas told IFW that forwarders had more than doubled their share of the container market in the last 20 years, as shippers increasingly acknowledged the value of their relationships with carriers.
Forwarders’ share of the sea freight sector increased to around 35% in 2009, compared with around 15% in the 1980s, and was continuing to grow.
He said the corresponding market share for air freight was 95%, a rise of five percentage points since the 1980s.
“When we look to shippers, we find they prefer freight forwarders because of their very good customer relationships,” said Damas.
“They are more receptive to their customers’ requirements and have proved to be adaptable in terms of providing extra services like IT or visibility systems.”
But the primary concern now for shippers is to secure capacity, says the report.
The report explains that even the very large shippers that have contractual agreements with carriers are now also using freight forwarders, despite increasing freight rates.
Sources said this trend accelerated last winter, when shippers found it increasingly difficult to access container capacity out of Asia and were forced to come to forwarders.
The growing influence of forwarders in the sea freight market can be seen in some of the larger players, such as Kuehne + Nagel, which now controls 2% of the container sea freight market, although the growth in the market has not been limited to the largest freight forwarding companies.
Damas said: “Even the small and medium forwarders have been very adaptable and have survived the downturn. They have very good local relationships and very good local markets.
“We found that if they treat their customers well, they will have a good future.”
Drewry’s report, Using International Freight Forwarders – Costs, Contracts and Best Practices, says the range of services and requirements of shippers from freight forwarders are becoming more complex.
It says many larger shippers are turning to forwarders to find smarter ways of handling and moving products more cost-effectively. Fixed-capacity logistics assets can turn into a strategic disadvantage in an economic downturn.
Damas said: “Generally, the outsourcing decision is driven by a comparison of internal and external costs, as well as assessing the benefit of turning fixed costs into variable costs.
“However, there are different levels of outsourcing, each of which represents different possible steps towards integration with, and dependence on, a forwarder.”
From IFW