Freight forwarding companies play an integral part in global economic growth. However, just like any other business, they encounter challenges in the day-to-day running of business processes.
In this article, we will look at the various hurdles freight forwarding companies face in their line of work.
Freight companies need a considerable amount of operating capital. From packaging to employee remuneration, a lot of money goes into funding business processes.
In most scenarios, consumers pay for shipping costs partly or when their goods are at the port. On the other hand, at the dock, delays in releasing goods affect how soon shipping companies get their hands on their money. For this reason, seeking the services of a freight factoring company is one of the best options. Through freight factoring, freight forwarding companies can get a hold of their money upfront, money they can use to purchase more assets and fund business operations.
- Costs of forwarding
With the current recession, the dollar (the primary currency used in global trading) fluctuates. Such fluctuations affect the cost of ferrying goods in freight companies, further trickling down the seller and consumer.
Additionally, with the rising cost of fuel, freight companies are having difficulties running their business as usual. They have to readjust their spending, manage their business processes, and optimizing travel routes to minimize the likelihood of asking their consumers to pay more.
- Container capacity
For efficiency and cost-effectiveness, shipping containers are filled to maximum capacity. However, when not enough cargo is available for shipping, freight companies handle the remaining costs, which adversely affect their business. Apart from hurting their profitability rates, they might be forced to translate the cargo owners’ costs concerning the company.
- Digital transformations
The world is evolving with technological advancements seeping into every sector of the economy, and the freight industry was not spared.
To remain current, improve customer satisfaction and efficiency in business operations, freight companies need to embrace digital transformations. However, the digital world is fast-paced, which leaves many freight companies struggling to integrate newer technologies into their traditional ways of doing business.
- Lack of enough workforce
The freight forwarding industry does have peak and off-peak seasons. During the low seasons, many ships are docked, with only a few remaining in operation. Freight companies do require people with technical skillsets. However, these low seasons discourage many experienced and qualified professionals from seeking employment in the sector. As such, these companies experience staff shortages.
- Government regulations
Cargo moves from one town to the other and moves from one continent to the other. Various governments have rules that regulate the transportation of goods. Depending on where the cargo is being transported from or to, freight companies experience different regulations that may not be easy to understand.
For this reason, freight companies are continually striving to keep themselves updated on all the laws of their country and those they transport to. Doing so ensures they stay in line with all the requirements and avoid rubbing shoulders with law enforcement.