The freight forwarding industry faces a long list of business challenges, such as global inflation and rising fuel costs.
Economic uncertainty and evolving regulations further magnify the difficulty that the industry faces. These types of issues highlight the complexity inherent in the freight forwarding and supply chain sectors. Understanding some of the most significant challenges in freight forwarding can help companies choose the best solutions in a constantly changing business landscape.
The global economic outlook continues to trend toward a downturn as businesses adapt to numerous challenges, such as inflation and rising interest rates. Russia's invasion of Ukraine and simmering tensions around the East China Sea further increase economic uncertainty, along with a worldwide trend of deglobalization.
Every business faces its own unique challenges. Freight forwarders and importers must find a way to balance costs with industry demand while maintaining key partnerships across their supply chains. Despite predictions of slowed growth, the freight forwarding industry will remain an essential part of the worldwide economy. Demand for goods won’t completely disappear, but companies should have contingency plans that include the potential for reduced demand.
Economic uncertainty and inflation lift the cost of doing business. Rising interest rates and fuel prices further elevate costs. Over the past few years, numerous events interrupted business as usual, ranging from pandemic shortages to the Ever Given container ship that blocked the Suez Canal for six days.
Companies can mitigate the impact of rising costs by utilizing technology that improves supply chain visibility, forecasting, and communication. Leveraging supply chain technology can lead to greater efficiency and flexibility while making it easier to maintain strong relationships with key supply chain partners.
Supply chain visibility refers to monitoring products, parts, and raw materials in real time as they move from one location to the next. This includes the procurement of raw materials, the transformation of materials and parts during manufacturing processes, and the distribution of finished products to wholesalers and retailers.
Some supply chains consist of a few partners performing simple tasks. In the global economy, supply chains can elongate to include dozens of partners and a complex mix of transportation and manufacturing modes in multiple jurisdictions.
A single glitch can greatly impact productivity, so an overarching view of the entire chain is crucial. Solutions like integrated supply chain and logistics management software can pinpoint inefficiencies within internal processes and external partnerships.
Despite the hype around artificial intelligence, driverless trucks aren't close to becoming mainstream. Meanwhile, a significant shortage of truck drivers has been affecting the transportation industry with no end in sight. Canada alone has an estimated shortfall of 20,000 drivers, while the global shortfall runs into the millions.
One of the primary concerns is demographics. The trucking industry has struggled to replace experienced and skilled drivers who are retiring out of the profession. Long-haul trucking is demanding, and younger demographics don’t appear to be drawn to trucking.
The industry is working to attract a more diverse range of people across demographics that haven’t traditionally gravitated to truck driving, including women and drivers in their early twenties. Similar shortages exist in other types of logistics roles, further increasing the importance of retention and recruitment across the entire industry.
The freight forwarding industry faces a frequently changing landscape of government regulations. Canadian trucking companies recently had to adjust to new rules that mandated the use of electronic logging devices (ELDs) for drivers to track their hours of service. The Canada Border Services Agency (CBSA) will soon enact another significant change in the way commercial goods will be imported. This could create delays for truck drivers who don't have the required import documents at the border.
Drivers should stay informed of changes enacted by the CBSA Assessment and Revenue Management (CARM) project. Importers must comply with the new regulations to prevent delays. Digital systems will shape the future of industry compliance as government organizations continue to update and digitize operations.
In a world of ever-changing regulations and requirements, you need an experienced partner by your side. Connect with Cole to find out more.