You won't see a skydiver jump off a plane without a parachute and/or a reserve chute. That's because the skydiver understands the risks and can plan well to subdue them.
All activities and businesses come with their risks. But how one plan to manage them - makes the ride less anxious. Likewise, Freight Forwarders too, take on activities with risks that are encountered at every step of the course.
Shouldering an important responsibility like - delivering the freight for a customer across cities, regions and even continents with the necessary legal compliance using several third-party services - makes a freight forwarder even more vulnerable.
While you appreciate the massive tasks carried on by the forwarder, also consider in-transit risks like cargo loss, cargo damage, cargo abandonment, and even fraud are very common. You may think insurance may cover all these incidents and the answer is a surprising NO.
In the following space, I will throw light on how freight forwarders can manage risks and have a less bumpy ride.
Contract Risks
Most entities in a freight forwarding process chain are bound by contracts. Every bill of lading, air waybill, delivery order, shipper letter of instruction, and master service agreement is a binding contract. The forwarding process itself is defined by Incoterms. Sure enough, Incoterms also include - when the risk of loss or damage of cargo transfers from the seller to the buyer. Delays in ports add roughly 10% to the cost of imported goods. Thankfully, with modern technology like GPS tracking, it’s much easier to avoid those costs by overseeing container movements.
Communication Risk
It is interesting to note how problems like incorrectly entering details like loading (and unloading) address, booking date, container space details cause delays and losses. The key problem is communication - or you could say miscommunication. If details are entered into the masters of freight software, the system propagates the same information across the chain from origin to the point of ownership transfer. Eliminating redundancy not just reduces the possibility of error but increases the speed of processing. A central database with real-time data access provides transparent communication to all teams.
The Incorrect Charge For Services
A grave danger for forwarders is the inaccuracy in making the right charge for the services. Undercharge and you hurt your profit. Overcharge and you hurt your customer and their future business. The numerous charges that encompass a shipment booking make it tedious when dealing with volumes. Not to mention the impatience with which a customer expects their quotes to be replied to, adds up to the pressure. Freight management software allows forwarders to generate quick, accurate, and yet competitive rate quotes for their customers. Being integrated, the rates are available to all functions like sales, accounts, and billing, thus maintaining uniformity.
Incomplete or Inaccurate Compliance
Irrespective of the size of the shipment and the distance to be traveled to reach its destination, documentation must be spot-on. Readily-producible documents and their accuracy make the flow of the shipment smooth. With freight software, packing lists, picking correct HS Codes, readying checklists, and the like are convenient to prepare and print if required. Built-in regulatory compliance integration provides sending export shipment data electronically to Customs. This reduces multiple data entries, demonstrating the power of technology. The shipment information once entered at booking level or house/master level is directly available at the Automated Export System (AES) filing level.
Bridging Transport Gaps
Freight Forwarding solutions play a key role in optimizing transport. Without proper documentation and prompt communication of delivery timelines, transport can incur unexpected costs. For instance, if the transport driver reaches the warehouse with incomplete documentation, he must make an extra round trip, causing losses. The further major implication could be - not making it before the vessel cut-off time. Using software solutions, empty drives and missed cut-off times can be well avoided.
Cost Calculation and Payment
It is well known that if a certain percentage of discrepancy is found between VGM and weight in shipping instruction, weight discrepancy fees amounting to about USD 100 per bill of lading can be levied. Such unexpected costs could be a burden on the freight forwarder. A digital solution has ready checks in place for multiple such use cases. A credit-heavy industry like freight forwarding must be able to pinpoint customers with outstanding when an attempt for additional credit is made. Such inter-functional coordination is possible with a real-time and synchronized database. Forwarders can prevent minor losses from becoming bigger holes in the profit pockets with intelligent freight systems.
Despite the stated or known risks, there are places where the freight forwarder could slip up and would have to bear the consequences. The use of integrated freight systems is a necessity to manage risks well in an increasingly competitive environment.
Originally Published in Portcalls Asia Magazine
https://www.portcalls.com/mitigate-forwarding-risks-with-integrated-freight-management-software/
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