{"id":334,"date":"2015-12-01T12:33:17","date_gmt":"2015-12-01T12:33:17","guid":{"rendered":"https:\/\/phoenixglobalgroup.com\/?p=334"},"modified":"2024-02-27T09:46:01","modified_gmt":"2024-02-27T09:46:01","slug":"global-logisitics-managing-the-freight-forwarder-maze","status":"publish","type":"post","link":"https:\/\/phoenixglobalgroup.com\/el\/nea\/global-logisitics-managing-the-freight-forwarder-maze\/","title":{"rendered":"Global Logisitics: Managing the freight forwarder maze"},"content":{"rendered":"
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While new overseas opportunities may be tempting some shippers to expand their reach, industry analysts contend that most are still being cautious. The prospect of finally having the Trans-Pacific Partnership (TPP) implemented has many forwarders excited, and, on paper, the opening of markets in Cuba and Iran also looks promising. However, the cold hard facts at the moment point to a continuing decline in U.S. exports. \u201cThe trade sector will continue to hold back growth for the next two years since the dollar continues to strengthen, and since the effects of a strong dollar take several quarters to filter through into prices and quantities,\u201d says Patrick Newport, U.S. economist for IHS Global Insight. Year-to-date, exports dropped by $3.7 billion and were weak across the board. Exports of industrial supplies and materials, which are sensitive to commodity prices, fell by $2.2 billion. \u201cThe most recent numbers suggest that trade will be a drag on third quarter growth,\u201d adds Newport. \u201cThe bite will likely be a reduction in real GDP growth of about 0.5 to 1.0 percentage points, depending on November trade figures.\u201d<\/p>\n

Impact of trade agreements<\/strong>
\nJust when it appeared that agreement among participants comprising the TPP would not be reached this year, the Office of the United States Trade Representative announced that recent discussion rounds in Atlanta produced consensus.
\nShippers and forwarders have been championing this deal even as it appeared \u201cdead in the water\u201d this past summer.\u00a0The National Association of Manufacturers<\/a>\u00a0(NAM), for instance, was especially bullish on this proposition. \u201cThe TPP negotiations have long presented a lot of hope for manufacturers in the U.S. and the millions of jobs they affect,\u201d says\u00a0Linda Dempsey, NAM\u2019s vice president<\/a>\u00a0of international economic affairs. \u201cIf done right, this agreement has the potential to boost U.S. manufacturing growth and global competitiveness.\u201d
\nThe Airforwarders Association (AfA), representing 360 companies and more than 300,000 employees who move air cargo through the supply chain, also hailed the agreement. \u201cThe record on trade agreements is clear,\u201d says AfA\u2019s executive director Brandon Fried. \u201cThey allow American businesses to sell products and services to the 95 percent of consumers who live outside the U.S.\u201d
\nThe TPP agreement includes a series of member agreements to lower tariffs, modernize customs border clearance, and ensure a level playing field for competition.
\n\u201cLowering tariffs and streamlining Customs border clearance operations are music to our ears, as this will spur increased trade both to and from the U.S.,\u201d says\u00a0Michelle Halkerston, CEO of Hassett Express<\/a>\u00a0and board president of the Airforwarders Association. \u201cAs freight forwarders, we recognize that liberalized trade agreements are critical to business both large and small that seek to expand their markets,\u201d she adds.
\nThat does not mean that caution is being thrown to the wind, however. Indeed, freight forwarders are carefully watching the Asia Pacific region for signs that a slowdown in China\u2019s economic growth will have an impact on its neighbors. This threat would be exacerbated if the country experiences a \u201chard landing\u201d in which GDP growth sinks below 5 percent for at least one year.<\/p>\n

Risk in burgeoning markets<\/strong>
\nWhen it comes to doing business in Cuba and Iran, however, shippers may want to stay with the bigger, globally connected freight forwarding intermediaries\u2014if they care to get into these markets at all.
\nBeth Pride, president of BPE Global, a consultancy specializing in import\/export operations and the development of global supply chain security programs, advises extreme caution when it comes to trade and regulatory compliance in these burgeoning trade regions.
\n\u201cWith Cuba\u2019s designation as a State Sponsor of Terrorism rescinded, the Anti-Terrorism (AT) license requirements from Cuba were removed and references to Cuba as a \u2018bad actor\u2019 were eliminated,\u201d Pride says. \u201cBut that doesn\u2019t mean shippers can relax. The country is still subject to a comprehensive embargo, and the list of license exceptions allowed for Cuba is shorter than the list of license exceptions we\u2019re used to.\u201d
\nTrade with Iran is equally problematic, says Pride, and shippers who have tried to penetrate the Russia and Ukraine market may not be interested at all.
\n\u201cOur government seems a bit out of touch regarding the realities of running a successful and profitable business\u2014while also being compliant\u2014in these complex times,\u201d says Pride. \u201cWe love the concept of Export Control Reform, but it seems as soon as things start to head in a more efficient direction something happens to complicate the ability to comply and keep U.S. businesses competitive at the same time.\u201d<\/p>\n

Yield dilution<\/strong>
\nHowever, globalization is no longer \u201cthe only macro-trend in town,\u201d says\u00a0John Manners-Bell CEO of Transport Intelligence (Ti)<\/a>, a London-based consultancy. \u201cAlthough it\u2019s still a work in progress and should not be dismissed, there are a number of other trends helping shape the market for shippers and their forwarders as well as the strategies they have to adopt in order to survive.\u201d
\nOne of the longest-term trends in the freight forwarding industry has been dilution of yields, meaning that forwarders have to work harder to maintain their revenues. A new report from Ti suggests that there are a number of reasons for this, including a shift in modes from air to sea.
\n\u201cGlobal manufacturers have found ways in which to flex their supply chains to utilize lower cost sea freight rather than more expensive air cargo,\u201d says Manners-Bell. A key driver behind this trend was the economic downturn, which prompted shippers to look\u2028at ways to \u201cde-cost\u201d their supply chains while still maintaining their efficiency.
\nRestructuring production schedules has also been part of this trend, as well as encouraging consumers to pre-order, removing much of the risk of holding too much inventory.
\n\u201cEven higher-value producers, such as consumer electronics companies, have adopted sea freight strategies, although air cargo uplift is often employed to meet the global demands \u2028of new product releases,\u201d says Manner-Bell. \u201cAfter an initial surge, the ongoing demand is often met by shipments moved by sea. Computer peripherals, such as screens, that were often moved by air are now far more likely to be shipped by container.\u201d
\nResearchers say that this may seem \u201ccounter-intuitive,\u201d as sea freight transit times are increasing as shipping lines introduce slow steaming in order to reduce fuel costs.
\nThis shift has been most pronounced on the Asia-to-Europe and Asia-to-US trade lanes, the two most important, indicating how vital this has been in reducing lucrative, high-value volumes to the detriment of the freight forwarding sector.
\n\u201cFor a number of years, we have also been witnessing the waning importance of intercontinental trade volumes to the sector,\u201d says Manners-Bell. \u201cWe asked respondents to our survey which lanes they thought had witnessed the highest growth, and intra-Asia came up as the fastest growing for yet another year.\u201d
\nManners-Bell says this has a profound effect on freight forwarders. \u201cNot only are intra- Asian movements much cheaper than those to either Europe or North America, but also the global forwarders have far less strength in this segment than they do in Asia-Europe or Asia-U.S. trades. This is especially the case in China-Japan trade,\u201d he adds.<\/p>\n

Global shift<\/strong>
\nThe global logistics industry is already seeing a major change to the relationship that drove its development for the last three decades and before, contend analysts.
\nOn average, between 1990 and 2008, real GDP grew at 3.2 percent a year, while world trade grew at twice this rate. This relationship was considered to be \u201chard-wired\u201d\u2014that is, until the financial crisis of 2009. The 2:1 ratio has since been replaced with more like a 1:1 correlation, meaning that most trade forecasts were first affected by the downturn and then affected by a structural change in market growth.
\nTi researchers say that there are several reasons for this. The first is that developed countries\u2014including the Eurozone\u2014have yet to fully recover, and therefore there\u2019s less demand for imports of consumer goods. Second, developing countries have been forced to focus their investment on domestic infrastructure\u2028to maintain economic growth. China is the best example\u2028of this.
\nThird, the global economic downturn has created\u2028more protectionist policies, which have acted as a drag on international trade. Furthermore, governments around the world have actively suppressed short-term consumer demand in their own economies.
\nAnd finally, the outsourcing trend to\u2028the Far East in 1980s, 1990s, and 2000s was a \u201cone-off gain\u201d for international trade. Since then, the increase in volumes has been incremental, as most production processes that could be unbundled and outsourced to remote manufacturing locations in Asia already have been.<\/p>\n

Source: http:\/\/www.logisticsmgmt.com\/article\/global_logisitics_managing_the_freight_forwarder_maze<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

While new overseas opportunities may be tempting some shippers to expand their reach, industry analysts contend [\u2026]<\/span><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[34],"class_list":["post-334","post","type-post","status-publish","format-standard","hentry","category-nea","tag-2015-el"],"yoast_head":"\nGlobal Logisitics: Managing the freight forwarder maze - PHOENIX GLOBAL FREIGHT GROUP S.A. - Since 1991<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/phoenixglobalgroup.com\/el\/nea\/global-logisitics-managing-the-freight-forwarder-maze\/\" \/>\n<meta property=\"og:locale\" content=\"el_GR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Global Logisitics: Managing the freight forwarder maze - 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