I recently spoke to a freight forwarder and he shared something that resonated with me.
He said – “You have to be ready with anything. Port congestion, customs delays, technological glitches, or geopolitical tides — it’s all part and parcel of this business.”
International freight forwarding is like navigating through stormy seas not knowing what events will unfold next.
It’s like a never-ending cycle of high and low tides. You need to navigate through these international freight forwarding challenges like a smart captain of a ship.
The ship in this case is your freight forwarding business.
So we decided to explore the stormy seas of international freight forwarding to find answers. As it turns out, we discovered some really interesting ideas and solutions.
In this article, we’ll explore the top 7 freight forwarding challenges and proven strategies to overcome them.
If you are new to the world of international freight forwarding, these insights will help you sail through the tricky waters of this business with ease.
If you are a seasoned player, you’ll be able to double-check your strategies and find ways to improve them.
Let’s begin this voyage.
Challenge 1: Port Congestion
I spoke to a freight forwarder recently, and he told me – “Port congestion is like a traffic jam on steroids. It can disrupt the entire supply chain and put everything on halt.”
While you can’t do much about the port congestion itself, you can figure out the workarounds so you can mitigate this risk.
Here is the solution:
Be proactive and prepare plan B, C, or even D ahead of time. Keep a watchful eye on the port traffic and get aware of congestion before it happens. Create a contingency plan for every shipment.
For example, if it means a slightly longer transit time, changing to off-peak hours or even less congested ports where possible. You can also pre-book space months in advance to avoid peak season bottlenecks.
Challenge 2: Customs Delays
Ask any importer or exporter about customs clearances and you’ll see more stressed faces than happy ones. If you have been in the logistics industry for a while, you already know how complex the web of customs rules and regulations is.
One mistake and you have to deal with a cascade of issues such as seizure of your goods, delays, and fines.
So how do you deal with this situation?
Hire a licensed customs broker.
These customs brokers are like the sherpas of international trade. They bring in expertise and connections to get your cargo moving through customs without a hitch.
But there is a caveat. You need to provide complete documentation to the customs brokers so they can do their job well.
That means:
- Triple-check your commercial invoices, packing lists, and certificates of origin for errors or discrepancies
- Provide product descriptions and HS codes in line with the customs regulations of each country
One of the best ways to streamline the documentation process is to use freight forwarding software like SeaRates ERP.
SeaRates ERP not only keeps all the documentation centralized but it also allows you to communicate within the system so you no longer have to search for email threads to find that one piece of document.
Challenge 3: Managing Shipping Costs
Shipping cost is the elephant in the room when it comes to freight forwarding. They can quickly balloon if not kept in check.
With so many variables at play such as – constantly fluctuating fuel prices, tariffs, surcharges, and new regulations it can be hard to manage shipping costs.
So how do you tame this elephant?
The key to managing your shipping costs is to spot efficiencies and economies of scale wherever possible.
For instance, you can optimize your routing to minimize distance, handling, and transit times. You can even consolidate your shipments with other cargo to spread out costs and access volume discounts.
Another great way is to negotiate long-term contracts and strategic partnerships with carriers, 3PLs, and other service providers.
And if you want to go even more innovative, consider alternative ports, lanes, and equipment that offer lower rates.
Freight forwarding software such as SeaRates ERP allows you to perform these activities with less work on your plate.
Challenge 4: Warehousing Crunch
As a child, I loved playing Tetris. Little did I know how it would show up when I grew up!
Warehousing almost seems like a game of Tetris. You’re in the quest of trying to fit more cargo into limited space! 🙂
The exponential growth of e-commerce has resulted in an increased demand for warehousing space. Finding warehouse space is becoming one of the rising freight forwarding challenges.
So how do you stay ahead in this warehousing game while saving costs?
You need to think and plan strategically.
Warehousing is not just about storage anymore – it’s about velocity, flexibility, and value-added services.
Forecast your storage needs in advance and pre-book the space with warehouse operators you can trust.
Explore creative storage options, such as sharing space with complementary shippers or using mobile warehouses. You can also forge partnerships with 3PLs who can offer warehousing on-demand.
When you think outside the box, you can turn warehousing into a strategic advantage for your freight forwarding business.
Challenge 5: Incoterms Misunderstanding
Another common cause of breakdown in international freight forwarding is Incoterms miscommunication.
Misunderstanding in Incoterms can lead to disputes and costly delays. We have also seen it damage business relationships and increase customer churn.
There is an old American proverb: “A wise man learns by the experience of others; an ordinary man learns by his own experience; a fool learns by nobody’s experience.”
To avoid the pitfalls of Incoterms misunderstandings, you need to invest in education and expertise.
Offer comprehensive training to your sales, customer service, and operations teams on Incoterm. You can hire experienced trade lawyers to bring in that expertise and help your entire team gain clarity.
The other important element of avoiding Incoterm disputes is clear communication. Make sure that Incoterms are understood by all parties involved in the transaction.
Communication and training on Incoterms are the twin secrets of keeping your shipments and client relationships on track.
Challenge 6: Geo-political Uncertainties
The complex landscape of geopolitical uncertainties is the harsh reality of the modern world.
Be it the war between Ukraine and Russia, or the volatile situation in the Middle East, these events have adversely affected the global supply chain.
As a freight forwarder, you need to figure out ways to navigate through this increasingly volatile world without getting bogged down by them.
So how do you overcome these geopolitical challenges?
The answer is – diversify.
To mitigate the geopolitical risks and economic uncertainties, you need a multi-pronged approach.
First, try to diversify your shipping routes and avoid over-reliance on a single channel. Remember, one is a bad number in the world of shipping.
Second, bring redundancy into your supply chain with multi-sourcing, nearshoring, and strategic inventory placement.
If you are in a volatile geography, develop a formal risk management plan so you can mitigate potential disruptions beforehand.
Remember, when you diversify and create a resilient supply chain, you can weather any economic or political storm.
Challenge 7: Managing Client Expectations
One of the most critical yet challenging aspects of freight forwarding is managing client expectations.
In an increasingly complex business environment, customers demand faster, and cheaper shipping solutions. And you need to find ways to balance cost, speed, and quality.
This is easier said than done.
Simply because you are simultaneously dealing with so many external factors that we discussed above.
In such a scenario, you need the twin power of technology at your disposal.
Using a freight forwarding software like SeaRates ERP, you can centralize all your communication, documentation, quotes, and invoices.
A good freight forwarding software also offers a customer service portal so clients can get real-time updates on shipments, review/approve quotes, and manage invoices – all in one place.
As a result, your customer service is streamlined and it adds a dash of professionalism that is so much needed in the industry anyway.
With clear, proactive, timely, and accurate communication, you can turn one-time customers into long-term partners.
After all, that’s where the real value lies.
Conclusion & Next Steps
When you implement the solutions, and best practices outlined in this article, you can not only overcome the international freight forwarding challenges but also turn them into opportunities for growth.
With the right freight forwarding software by your side, you can not only solve most of these challenges but thrive and grow your business with confidence.
If you are looking to streamline your freight forwarding operations, here are a few things you can do:
Option #1. Find out how SeaRates ERP can transform your business and streamline your operations by clicking here.
Option #2. Experience how our solution can save costs and improve the efficiency of your operations – Book a demo.
Option #3. Discover success stories of Freight Forwarders who have been in your shoes and are getting ahead in the game. Read their success stories.
