The current climate for many freight forwarders, across the globe, has been one of scepticism for several months now. Has much, if anything, changed in March? The sad answer. Not really. We still have an uncertainty regarding the Brexit conundrum we find ourselves in.
The economic, political and sociological repercussions are still a mystery; however, I can have a well-educated guess as to what it will mean for the most of us.
I know, most of you are reading this with a bit of distain, maybe even a slight hatred for the word ‘Brexit’ itself. Though, regardless of how much you are sick of hearing the word, or me converse about it, you can’t run away from the fact the May, and the gang’s, decisions could potentially affect your business for the foreseeable future.
Freight forwarding is one of the most profitable industries in the world, and its top performers are almost as profitable as some of the tech giants secluded away in Silicon Valley.
Forwarding’s experience and productiveness has led to a structured business model that many would find hard to replicate. Imagine Apple where told that due to Brexit their distribution and trading routines where going to be interrupted / increased in price. There would be an uproar.
Now, whilst I understand the dust has settled from Brexit, we still need high profiled people from within the industry to push for quicker, and more concise, negotiations. So far, the talks regarding what will happen to European trade has been unclear, at best. Again, I’m very aware it’s a complicated process, but, someone needs to step forward and give people peace of mind for their business.
Due to lack of clarity regarding our departure, freight forwarders really need to fend for themselves for the meantime. Many bigger companies within the industry will need to align with agents across Europe, helping concentrate resources and having a stable plan in place before we exit.
It will be costlier in administrative terms for forwarders to deliver into Europe, but with electronic processing, assuming this remains in place, the impact should be minimal.
If the UK Government is smart, they will increase the low value threshold from £15 to anywhere upwards of £150. This appears to be a harsh punishment for distributors coming through to the UK, however, for the many, this will keep the industries stability it’s known for.
We know vast numbers of shipments are coming into the UK without paying duty and vat – perhaps hundreds of thousands, every day. This may help stem any economic leakages and help anybody that hasn’t had the foresight to collaborate with a European equal before the split.
Whilst I tend to concentrate on the negatives of the Brexit fallout and freight forwarding, we have tended to miss a trick with the rise of online. Everything is going electronic, giving greater and more instant visibility. The physical documents we still, in places, use will become a thing of the past soon. Everything will become digital and this affects us in a positive way. If the government goes away from this, and doesn’t take this into account, trade will begin to become more expensive and could result in a collapse.
No Government wants to be in the firing line when it comes to the fall-out of an industry. Easy of trade is the only way a country can expect to develop their import / export, and this needs to happen at every point of the logistics chain.
These must be taken as positives in the Brexit debate. The Government must respond to these changes or face the wrath of an incredibly big and powerful industry, which backs up our economic standing, and they would rather keep freight forwarding onside.
Getting away from the Brexit debacle, there is plenty going on throughout the rest of the world. E-commerce and digitisation continue to re-shape the market place for many freight forwarders.
The global freight forwarding market has grown by 2.7% since 2016 but owing to a continuation of excess capacity issues and lower average oil prices, rates are, in more recent times, falling in, with the sea freight sector taking the brunt of the hit.
The market is anticipated to grow at an annual growth rate of 4.1%, as global trade volume growth accelerates, which is great. The digital age, combined with e-commerce is one in which we can expect faster results and better-connected industry.
However, any business moving freight globally, should plan their budgets accordingly. Digitalisation, along with changes to the competitive landscape, due to a variety of reasons, and, ultimately, whether forwarders can adapt and survive the upheaval being caused by the continued evolution of the digital supply chain is something that we should all keep a close eye on.
With the, somewhat, up and down nature of the digitalisation of freight forwarding, and the role e-commerce will play, emerging markets are set to grow. Emerging markets are predicted to grow this year at their fastest rate since 2013, according to the latest Agility Emerging Markets Index.
In 2017 the IMF GDP figure stood at 4.6%, while in 2015 and 2016 the figure reached 4.3% after five years of decline. If the projection for 2018 is correct, it would mark the fastest expansion of emerging markets since 2013 and a second consecutive year of higher growth in developing countries.
Not to bang about it, but this is a huge advantage to any discussions happening regarding Brexit. It could be considered one of the best bargaining tools distributors could bring to the table.
Overall, 65.1% said the 4.8% growth rate was ‘about right’, 33% felt it was ‘too optimistic’ and 1.9% felt it was ‘too pessimistic’. This isn’t the biggest growth within the sector by any means, and we need to make sure we continue to increase, or at best, maintain the steady rate of growth.
In other news, BIFA recently announced their winners in its Freight Service Awards Competition 2017. The winners of the eight General, Modal, and Specialist categories in the Awards, which has established a benchmark of quality for the British freight forwarding industry for more than a quarter of the century, are: Superior Freight Services UK, TR Logistics, Dachser, B&H Worldwide, Metro Shipping, Moto Freight, Pharmafreight, and Morgan Cargo.
The annual awards were considered a success and can be measured evaluation for the growth of forwarding companies throughout the UK. The awards reward excellence and the luncheon is a opportunity for Members and guests to network, cement existing relationships, and develop new ones.
This is something, if you were unaware, can be considered a benchmark for industry standards, and you should try and get in the know for any forwarding networking you may want to be doing.
The overall tone of the freight forwarding industry is, yet again, that of uncertainty. Everyone appears to be tentatively awaiting the eventual leave date from the EU. Although, we can still see that this tentative balancing of opinion is something that still isn’t slowing the growth of the industry. Hopefully this trend continues, and we see freight forwarding on high, Brexit or no Brexit.