Never mind the inevitable ‘May the 4th be with you’ jokes that this month brings; a plethora of conferences, events and dealings means that there is no let up for the hard-working freight forwarding practitioners out there. This busy period means that various aspects of the industry need to be examined in May, such as our good old friend Brexit, the environmental impact the industry is having and what we are doing about it, the current economic projections now we have entered the second quarter of 2018, along with other goings on that everyone should be aware of throughout the industry.
When looking at the industry, I usually take a gander at the happenings of Brexit and exactly how this is going to affect your business. This month I’m going to push myself away from this worn-out rhetoric and delve into the environmental side of the industry. Earth Day is a celebration of the world coming together to become more environmentally aware of our impact on the planet and, with this ethos in mind, perhaps the freight forwarding community should take a closer look at exactly how we are involved in this.
Whilst over the past decade or so, many in the freight forwarding industry have looked at their carbon footprint and attempted to innovate in the way they ship products around the world. However, as the economy picks up, the demand for freight is growing once again. This has many environmentalists worried that not enough steps are being taken to reduce the overall effect freight forwarding is having around the world.
Some forms of distribution will always be greener than others.
High-speed rail is something that has divided many throughout the UK, but its overall green effect on the rail freight industry cannot be dismissed. The rail link could help the freight industry to improve its environmental record by a considerable margin and push others throughout Europe to follow our lead. EU initiatives such as the Marco Polo Programme have meant the UK has received funding to trial the use of freight trains on the railway. Using the rail line to transport freight through Europe would significantly reduce the amount of freight being transported by road, which would help cap CO2 emissions. There are flaws in this rail freight plan, but the HS2 high-speed rail link should be a massive consideration for many influencers in the industry if we wish to make forwarding a more sustainable industry.
Fuel accounts for at least 30% of operating costs of most road freight transport operations, so by looking at new and innovative ways of distribution we are not only creating a friendly environment for future generations, we are also looking at creating a more efficient industry. Many freight forwarders are generating a more eco-friendly approach to business. Many have approached this by making and receiving deliveries to and from a central distribution centre.
This has been seen to be cost-effective and has a lesser environmental impact than a dispersed distribution system.
With many new apps and online developments pushing the industry into uncharted territory we can see exactly why making forwarding a more environmentally friendly industry is crucial to its survival. This has meant that many freight forwarders can now review startling information that may change their distribution habits. There are now sites which can show the difference in efficiency for many different aspects of the industry. You can now, at the press of a button, understand that one tonne of cargo per gallon of fuel will travel approximately 500 miles by sea as opposed to 60 miles by road. This knowledge is set to help the industry continue to innovate and lead in environmentalism.
In practical terms, Yusen Logistics has developed innovative, environment-oriented policies using technological solutions to greenhouse gas emissions. Policies were designed to create efficiencies for the company and benefits for the customer.
A vigorous continuation of their improvement process was introduced with environmental progress at its core, providing a clear focus and incentive for efficiency and best practice. The main target was to reduce their CO2 emissions by at least 10% by 2013, and in that they indeed succeeded, cutting down on cost-efficiency in the process. A win for the environment, and a win for the freight business.
Speaking of business, we have fallen into quarter two of 2018. In what seems like a surprisingly quick delve into the months of the year we have seen a similar progression from the first quarter. Growth in key markets has steadily lifted the industry in an all-round capacity. With companies seeing the net turnover growth of as much as 11.5%, and earnings for the period increased as much as 3.8%. This is a positive step for the industry overall, but nobody can remain complacent in a volatile market.
Brexit still casts a shadow of doubt over the industry in the UK, which in just under 12 months could lead to this growth slowing down – or worse plummeting. Whilst not all the results are yet in for Q2 we can see – for the majority – it has been a profitable start to the year. Though I am aware of the recent decline in some businesses, causing many to question many European freight forwarders having a ‘mixed year’, these small lapses are simply that: small lapses. The forecast for the next quarter is one of steady growth, with the likes Lufthansa Cargo continuing its great year as it saw air cargo demand increase by 9.3%.
Brexit is the topic still very much on the lips of everyone in the industry, and I’m afraid the uncertainty that comes with it means that neither I nor anyone else has a firm grasp of exactly how it is going to affect freight forwarding. Whilst slower short-term growth for container freight and a reduction in trade is likely, we also need to concentrate on importers and exporters facing a reduction in the direct mainline container services calling at UK ports. This would mean having to use feeder services, adding a further layer of complexity to the shipping process. This is something that no freight forwarder would want to happen and is something to rally the UK government into paying close attention to.
With Brexit looming and bringing with it a certain vagueness for the industry. We do have many things to look forward to. Multimodal was the perfect place to network and gain industry knowledge and expertise across the board. It was certainly a great success for us and was our third year there at our stand, of which we’re very proud. Events like that give the whole industry a boost and we look forward to seeing the increased buzz.
Matt Dailly, Editor, FORWARDER magazine