More than ever, the standard of work is essential to the efficient administration of logistics and freight forwarding. Shippers are responsible for prompt communications, precise funding, and preferred procurement strategies.
These activities also need to line up. In the international world of e-commerce, freight never sleeps.
Shippers need to keep up with customers’ rising expectations. Risks must be reduced. They have to adhere to strict cyber security regulations.
They must stay clear of trade war difficulties. It is really difficult to guarantee success for the remainder of 2018.
Additionally, shippers need to be aware of a couple of this year’s logistical trends. They must be aware of rate changes. As important supply chain trends emerge, they should take into account the difficulties, innovations, and potential results.
Overview of the Logistics Sector in 20 Seconds
The world’s logistics industry is in disarray. The expansion of ground, air, and sea transportation is straining shippers’ financial resources.
The shortage of capacity in ground transportation is hardly being addressed by available capacity. The success or failure of freight forwarders and shippers in the future will be influenced by changes in global trade policy.
Trucking rates are rising, as Bruce Barnard of the Journal of Commerce explained. In 2017, trucking rates in Europe decreased by 14.7%. Compared to the start of 2017, prices have already risen significantly in 2018:
- This year’s average rates were 7.1% higher.
- The capacity keeps getting smaller.
- Air freight rates increased by 4% globally.
- Rates for standard ocean containers have also increased.
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The 2018 Freight Change and Management Influencers
There are mainly two areas that affect change in the sector. These include demands and policies.
It’s been a crazy year. In light of the Trump Administration’s implemented and threatened tariffs, trade practices are changing. Such modifications pose significant logistical difficulties.
International shippers may bear the brunt of the move, according to John D. Schulz of Logistics Management, as key foreign parties worry about how the global transportation sector will respond if duties increase once again.
Higher taxes on commodities like steel, aluminum, and others could be the effect of such reforms.
International trade, according to John D. Schulz of Logistics Management For instance, Union Pacific Group (UP) believes that 40% of its overall trade volume is with foreign countries. Freight rates will rise in response to any change in tariffs.
The cost of doing business will increase for freight forwarders. The cost-effectiveness of transportation globally will decline overall. A trade war is imminent in the state. The issue is not the only one.
International shipping costs have been impacted by European ocean container shipping lines. The European Shippers’ Council (ESC) recognized “deteriorating shipping lines” to be a major problem, according to Patrick Burnson of Logistics Management. There is a prevalent perception of “difficult” service.
Customer support has been diminished. Shippers have no idea where their cargo was. Process standardization was lacking. Furthermore, this made shipping tracking challenging. Customers became irate. More money was lost by businesses.
Consequently, the need for freight forwarders has increased. To solve problems, shippers resort to freight forwarders. Freight forwarders can take care of service, guarantee on-time shipping, and control ocean rates.
Changes in Freight Rate and Use for This Year
Ocean Freight Rates
The price of ocean freight has also changed. Freight forwarding usage has increased as a result of the fluctuating shipping rates. Higher spot charges are charged by ocean container lines to make up for missed revenue.
Greg Knowler of the Journal of Commerce claims this. Because of this, projecting ocean rates is nearly impossible. In comparison to a year ago, average rates have increased by more than 37% today.
Air Freight Rates
According to Air Cargo News, air freight charges have increased generally as well. Over July, European air cargo rates fell further. Overall, growth is still continuing. Growth rates, however, have slowed.
Initial forecasts anticipated a 4% increase. That was shortened. The German airline Lufthansa has seen a 2% rise so far this year.
Cargo traffic increased by 2.8% on Finnair. The business also put several bigger aircraft into service. The capacity went up by 7%.
Having the proper price, location, and service is essential when moving freight. A mistake could result in higher freight expenses. The inefficient use of the capacity was brought on by failures in these areas.
Additionally, it limits capacity. The issue only gets worse as a result.
Ground Freight Rates
Ground freight costs soared everywhere. Postal loads increased 27%. Availability of trucks only rose by 14%. According to Zipline Logistics, the contracted fees stayed about the same.
Due to this issue, Todd C. Fowler of Key Bank Capital Markets, Inc. predicts a 25–30% increase in spot freight prices.
There are no exact numbers available regarding volume gains in 2018 over 2017. However, the majority of carriers are focusing on dimensional pricing schemes. They are giving up on using conventional freight classification techniques.
Now, the stable ground volume may be subject to additional bunker costs. A new instant fee on all ocean and land freight has been announced by the Mediterranean Shipping Company (MSC).
As a result, transport expenses will generally increase. Increased rates could endanger industry profitability in 2018. Actual statistics won’t be accessible until the beginning of the 2019 logistic trend.
What about New Technology in Logistic Applications and Its Impact on Global Freight Management?
According to Supply Chain Brain, Gartner highlights the application of technology to enhance logistics. Among these advancements are:
Artificial intelligence that is more democratic (AI)
The term “democratization of technologies” refers to the transfer of technology management to the general public. Not governments but F-forwarders are meant here. It also gets technology into the hands of shippers.
One of these is blockchain. Leading logistics trends for 2018 and 2019 will include it. By 2020, blockchain will be fully developed. It can benefit customers as a ledger as well. They will get real-time shipment status and peace of mind as a result.
Digital Ecosystems
Data and computing power will link people and technology. Drones, miniature robots, autonomous vehicles, and other devices are included in this.
According to NBC News, a 140-foot drone with a 200,000-pound cargo payload may be traveling to China by 2020. There are countless opportunities.
Outsource Freight Management
The most important action to take in order to survive the freight and logistics challenge of 2018 is this. International shipping is unreliable under the Trump Administration due to uncertainty.
The responsibility for compliance, classification, and verification of cargo details falls on a third party when using a freight forwarder like Freight Hub. Utilizing a third-party partner enables shippers to remain concentrated on producing and organizing product orders without becoming sidetracked by developments in the logistics sector.
Thanks, businesspara
