Freight forwarding networks and associations have been around for years. They are now a fixture in the supply chain…an intricate player in the wider business of moving freight. The freight forwarding networks are in prime time.
There’s nothing really new about freight forwarding (logistics providers) building “networks”. Loose arrangements between international freight forwarders have been a factor in logistics for decades. In fact, it could be argued the entire China trade of old was built around trusted relationships between various agents that could be construed as a “network”. But these relationships were simply an aspect of business, not an industry.
The last two plus decades have seen an unparalleled rise in freight forwarding networks. The exact reasons for the spike in networks might vary but in polling the opinions of many of the network organizers, a common theme emerges.
In recent decades some forwarders like Panalpina, Kuehne & Nagel, Ceva, Agility and Geodis, grew into mega-forwarders. These forwarders were able to leverage their size into a presence throughout the supply chain. Even as the supply chain became more complex, the mega-forwarders were able to either expand organically or acquire the necessary technology or expertise (nearly all the mega-logistics companies made significant acquisitions of smaller competitors to either build their cargo base or IT). In an industry full of mom & pop shops the shear scale of mega-forwarders tilted the competitive balance. The smaller forwarders couldn’t compete with the array of services, offices and IT platforms of the mega-forwarder.
But independent forwarders often have an advantage on their larger corporate brethren, especially in the respect to having close relations with the BCOs and knowing the local turf. This is particularly true when talking about freight moving in countries in Africa, Asia and the Middle East. Size isn’t the most important trait in these relationships.
By George Lauriat | Nov 23, 2015 |Transport Intermediaries
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