Freight For­warders: The life­line of lo­gis­tics in­dus­try

Freight for­warders are an in­te­gral part of lo­gis­tics sec­tor trans­port­ing huge chunks of cargo. CARGOTALK speaks to ex­perts to know the global prac­tices that freight for­warders need to adopt to move cargo pro­fi­ciently and the is­sues for­warders are fac­ing a

Cargo Talk - - Front Page - KAL­PANA LOHUMI

He­mant Bha­tia Pres­i­dent, The Air Cargo Agents As­so­ci­a­tion of In­dia

The two im­por­tant is­sues–‘ease of do­ing busi­ness’ and ‘trans­ac­tion cost’ have to be ef­fi­ciently and ef­fec­tively im­ple­mented to pro­vide a level play­ing field to the In­dian freight for­ward­ing and lo­gis­tics in­dus­tries in tune with global stan­dards. The in­cum­bent Union Gov­ern­ment has been im­ple­ment­ing many mea­sures to fa­cil­i­tate trade and in­dus­try in the con­duct of their busi­ness. Cur­rently the ex­press cargo in­dus­try (courier busi­ness) has been pro­vided var­i­ous fa­cil­i­ties, whereby their goods can be cleared in a mat­ter of a few hours, whereas the freight for­ward­ing in­dus­try has to fol­low cum­ber­some pro­ce­dures and sub­mit var­i­ous doc­u­men­ta­tion, thus tak­ing them much longer for clear­ance of goods. A level play­ing field should be pro­vided to all seg­ments of goods which are trans­ported by air (air freight, courier, air cargo char­ters). With re­gard to tax­a­tion is­sues, the freight for­ward­ing and lo­gis­tics in­dus­tries are cur­rently grap­pling with nu­mer­ous de­mands from the ser­vice tax au­thor­i­ties all over In­dia for pay­ment of ser­vice tax for var­i­ous types of trans­ac­tions. Such de­mands are not in tune with the ap­pli­ca­ble reg­u­la­tions in de­vel­oped economies such as UK, Aus­tralia, Sin­ga­pore where sim­i­lar trans­ac­tions are ex­empted from ser­vice tax.

Bharat Thakkar Past Pres­i­dent and Per­ma­nent Mem­ber - Board of Ad­viser ACAAI and Joint Man­ag­ing Di­rec­tor, Zeus Air Ser­vices

Freight for­warders are ‘un­sung heroes’ - the back bone of eco­nomic strength of our na­tion and are re­spon­si­ble to help exim main­tain their tar­get, with­out com­plain­ing in spite of no in­dus­try sta­tus in the chang­ing times. There is vari­a­tion of roles be­tween a travel and a cargo agent. A pas­sen­ger can buy a ticket on­line, walk through the ter­mi­nal/reg­u­la­tory, checks-in and that is it. But a cargo agent ar­ranges cus­toms en­try ap­plied for gsp/cer­tifi­cate of ori­gin, pick up goods, weigh, mark, af­fix air­line awb/han­dling la­bels and sev­eral other things. Ef­fi­ciency in get­ting freight off an air­craft is lu­di­crous. If pas­sen­ger can get bags off an air­craft in an hour then why can’t we han­dle air cargo with some of the same ef­fi­cien­cies? Ev­ery stake­holder needs to deal with this cri­sis, as busi­ness Is down due to global slow­down. The moot ques­tion re­mains, ‘Why are we not able to reach the lev­els of air cargo up­lift that other coun­tries have?’ We need to set a mile­stone that we can achieve in 2016 and at least we can look back in 2017. Air­ports have got to lead this change here and not al­ways look to re­duce free pe­riod with­out ac­count­abiliy.

Cyrus Kat­gara Part­ner, Jeena & Co

For­ward­ing busi­ness is ever evolv­ing. Con­ven­tion­ally the value ad­di­tion of the for­warders was to make the cargo ready for car­riage. That re­quired both en­sur­ing its air­wor­thi­ness or sea­wor­thi­ness as well as ac­cu­rate doc­u­men­ta­tion for com­pli­ance with trans­porta­tion as well as cus­toms com­pli­ances. For­warders also are ex­pected to op­ti­mise the cost­ing by ap­pro­pri­ate con­sol­i­da­tion route plan­ning and choice of car­ri­ers. Glob­ally, in ad­di­tion to th­ese func­tions for­warders now need to be­come ac­tive part of an in­te­grated end to end sup­ply chain with de­mands on value added func­tions of IT in­te­gra­tion with cus­tomers and other stake­hold­ers as well as align­ing phys­i­cal han­dling and pro­cess­ing of cargo with the last mile dis­tri­bu­tion re­quire­ments at des­ti­na­tion. In In­dia we need to de­velop such ca­pa­bil­ity with the home­grown com­pa­nies too. Cor­po­rate so­cial re­spon­si­bil­ity and risk man­age­ment are the emerg­ing con­cerns glob­ally and we need to build ca­pac­i­ties to ad­dress such con­cerns of global buy­ers.

We are in a pe­cu­liar busi­ness of trad­ing a highly per­ish­able com­mod­ity that is air/sea freight. Such trans­ac­tion en­tails high vol­ume with high fi­nan­cial, com­pli­ance and se­cu­rity risks while the stiff com­pe­ti­tion keeps pulling down the mar­gins to its low­est lev­els. In or­der to sur­vive such a tough busi­ness en­vi­ron­ment high de­gree of com­pe­tence is re­quired from the staff and the pro­cesses and com­pli­ance checks have to be cal­i­brated and fine tuned to the mi­nut­est lev­els to avert any po­ten­tial risks. In In­dia the ad­di­tional chal­lenge is thrown by the slow ju­di­cial process that in­creases the fi­nan­cial risks.

Ar­naud Cauchy MD, GEFCO In­dia

On the global front, freight for­warders need to have a strong in­ter­na­tional net­work so as to sup­port the cus­tomers and the re­gions that they op­er­ate in. It is very cru­cial in our in­dus­try to pro­vide door to door ser­vice in the most ef­fi­cient and timely man­ner across all re­gions of op­er­a­tions for all the global cus­tomers; it is only through this that freight for­warders would be able to bring value to the cus­tomers’ sup­ply chains while en­abling them to achieve greater growth and com­pet­i­tive­ness.

Pri­mar­ily there are two main is­sues for­warders are fac­ing across the globe. The first one is the process of free cir­cu­la­tion of goods. Freight For­ward­ing Com­pa­nies will need to have an Au­tho­rised Eco­nomic Op­er­a­tor (AEO) li­cense that al­lows the en­tire process to be cer­ti­fied. This has been put in place in the mar­kets like the US but it is still not in prac­tice in other re­gions. Ac­qui­si­tion of this li­cense will en­sure the safe and se­cured ser­vices in the trans­porta­tion of goods. It will help in as­sur­ing cus­tomers about the safety and se­cu­rity of their goods; ad­di­tion­ally also aid in stream­lin­ing the cus­tom clear­ance pro­cesses and mak­ing them trans­par­ent and user friendly. The sec­ond is­sue that is broadly faced by the freight for­warders is the cus­tom clear­ance pro­cesses. Cus­toms pro­cesses at present, are very heavy and te­dious and thus, there is a need to sim­plify the pro­cesses across globe. There has to be a nec­es­sary mea­sure to ex­pe­dite and sim­plify the process which will help in re­duc­ing trans­ac­tion costs for trade.

R Jayaku­mar Chair­man, Jayem Lo­gis­tics

Let’s talk about some in­sight on for­ward­ing in­dus­try. World­wide the sit­u­a­tion of freight for­ward­ing in­dus­try is grim and there are no signs of re­cov­ery at all, not at least till 2017. Freight prices have dropped sig­nif­i­cantly in the his­tory of ocean cargo.

Glob­ally all for­ward­ing com­pa­nies are go­ing through tough times; ca­pac­ity is huge and de­mand is pretty low. Cut throat com­pe­ti­tion has made this in­dus­try suf­fer a lot, all trade lanes Europe, US, China, In­dia, Sin­ga­pore are bleed­ing. All for­warders, MNCs or In­dian com­pa­nies are in­cur­ring heavy losses due to rate cut steep drop in freight rates.

Cou­ple of decades ago In­dia was an emerg­ing mar­ket for most of the MNCs in or­der to sup­port their global cus­tomers. Multi­na­tional for­ward­ing com­pa­nies brought their tech­nol­ogy and best prac­tices to In­dia and pro­cesses be­came easy to adapt and ad­vanced tech­nolo­gies brought ef­fi­cien­cies in the work cul­ture, vis­i­bil­ity and track­ing.

Mod­ern ma­te­rial han­dling tools has in­creased work­ers pro­duc­tiv­ity and min­imised the dam­ages, and high-tech sur­veil­lance brought down the pil­fer­ages. Gov­ern­ment of In­dia has taken all nec­es­sary steps to mod­ernise the trade poli­cies and in­fra­struc­ture for bet­ter han­dling, ef­fi­cien­cies, and econ­omy.

Huned Gandhi Man­ag­ing Di­rec­tor, In­dia Air & Sea Lo­gis­tics DACHSER In­dia

Freight for­warders are in­deed a very in­te­gral part of the sup­ply chain and the in­dus­try has been work­ing re­lent­lessly to pro­vide high qual­ity lo­gis­tics solutions to cus­tomers.

Stan­dard global prac­tices are very im­por­tant as our cus­tomers are go­ing global and they ex­pect the same ser­vices in Europe, Amer­i­cas, Asia and other dis­tant mar­kets. It is also im­por­tant that freight for­warders align them­selves with global best prac­tices like GDP, AEO to en­sure that the ship­ments are han­dled smoothly and se­cu­rity is not com­pro­mised within the trans­porta­tion chain. The need for a very high de­gree of spe­cial­i­sa­tion and cer­ti­fi­ca­tions based on global prac­tices is the fu­ture.

Vi­neet Chadha Man­ag­ing Di­rec­tor Com­bined Lo­gis­tics

The freight for­warder doesn’t ac­tu­ally move the freight it­self, it acts as an in­ter­me­di­ary be­tween the client and var­i­ous trans­porta­tion ser­vices. Send­ing prod­ucts from one in­ter­na­tional des­ti­na­tion to an­other in­volves a mul­ti­tude of car­ri­ers, re­quire­ments and le­gal­i­ties; and to han­dles the con­sid­er­able lo­gis­tics of this task for the client is a freight for­warder’s task.

Freight for­warders has to deal with nu­mer­ous is­sues to play in tune with the global stan­dards. Freight for­ward­ing ser­vices ne­go­ti­ate the best pos­si­ble price to move the prod­uct along the most eco­nom­i­cal route by work­ing out var­i­ous bids and choos­ing the one that best bal­ances speed, cost and re­li­a­bil­ity.

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