How Technology Protects and Grows Margins for Freight Forwarders

Freight forwarding is about margins. There is, of course, a lot that goes into being a successful forwarder, but with no margins, there are no profits. This means your ability to protect and grow margins is the key to your company’s success.

This does not mean forwarding is only about low rates. Smart companies know that competing on price alone is not sustainable, even if it may provide some short-term victories. Providing faster and better service helps you differentiate yourself and charge more—and ultimately improve your margins.

Despite many hurdles preventing its wider adoption, it’s not surprising that technology is proving to be the best way for forwarders to take on this challenge of differentiating their service while maintaining strong margins.

Here are 5 ways technology can fulfill this promise:

Technology helps to provide a better customer experience. Forwarders can use technology to improve how they interact with customers—for example, enabling them to look up rates and book shipments online. This, as opposed to the old-school process of requiring customers to call you and then wait hours or days for quotes. All the information they require is available—technology just makes it possible.

Technology enables forwarders to be more confident in their costs and, therefore, their quotes to customers. Being sure of their cost basis, which is especially hard with international shipping, is key to reducing risk while still being to provide the most competitive quote possible. Rate accuracy matters and accurate quotes are impossible without technology supporting the rate management and rate calculation process.

Technology also does the obvious—like helping to automate manual tasks and processes within the forwarding operation. Although the industry is often criticized for relying too heavily on phone calls and faxes, leading forwarders leverage technology to eliminate these manual steps and digitize as much as possible—all with the ultimate goal of improving their customer’s experience and protecting their margins.

The flow of information also improves with the use of technology. Challenges inherent to international shipping like documentation and customs paperwork are more easily managed. Data and paperwork are completed and shared more efficiently with lost paperwork rerouted quickly and problems resolved faster.

The benefits are not just for forwarder customers either. Suppliers benefit from these types of improvements as well, which help margins in other ways. For one, carriers prefer to work with forwarders whom they know operate efficiently. Knowing this, they’ll give those forwarders preference with rates and service, knowing the company is easier and more reliable to work with.

Freight forwarding is a competitive market where margin protection and operating efficiency are a priority for everyone. Technology and its application by freight forwarders is a key tool for achieving these objectives while at the same time differentiating service performance.