The logistics and supply chain industry is highly regulated by agencies that control and monitor the flow of goods from the producer to the final point of distribution. As some of the main participants in this industry, freight forwarders, and customs brokers are also often hit by unexpected governmental and health decisions that in many ways can slow down and sometimes hinder their business growth.
For the past 61 years, The Florida Customs Brokers & Forwarders Association (FCBF) has been servicing and supporting freight forwarders and customs brokers through educating their members on regulation changes and providing strategic networking opportunities. We wanted to learn more about their role in the industry and about how they see the current ecosystem.
We interviewed Megan Conyers, the Executive Vice President at FCBF, to get a deeper understanding of the inner workings of the organization and how she sees the role of freight forwarders and Customs brokers being transformed currently.
What are some of the main worries of freight forwarding businesses at the moment and how can they address them?
This is a really interesting question because one of the hottest topics that everybody is dealing with is coronavirus, and while a lot of people are focused on the exports coming from China into other countries, freight forwarders are also being affected, particularly those that are forwarding things to Asia or are just in need of containers.
If you think about what's going to happen, trade has been reduced to a minimum as far as the number of containers and cargo that's going back and forth across the ocean—and rightfully so—we all want to be as precautious as possible. But then think about what's going to happen when everything comes back online and we start reaching capacity.
We're going to be extremely saturated, there's not going to be enough containers or even ships available for all that cargo that would have normally been carried spread out over the last several months. It will all be condensed into one hammer of impact. We need to look out for that to be able to properly plan out and anticipate a saturation of cargo use over the next few months, and even all the way through the summer.
This will come down to crisis management and relationship management. Forwarders and brokers will have a lot of clients who really want their freight because they're tired of waiting, so they will need to start putting specific mechanisms into place to not only be able to scramble to get freight going where it needs to go but also being able to manage customer expectations.
A way to address this issue in the future could be diversifying supply chains and really being aware of the other opportunities out there moving forward.
As shippers, importers, and exporters around the world are planning their supply chains and finding sources for materials and goods, looking at some of the new trade agreements that are being signed and looking at some other markets and being able to diversify supply chain so that we're not just dependent on one place or market for our goods.
I think this could exacerbate globalization, there's a lot of focus especially from the US side in bilateral trade agreements, which is great because we're able to really understand the opportunities in each region and how they balance out the United States. But on the flip side, we should work to understand as we start negotiating with all of these different countries and markets, how we can best showcase the strengths of each region so that shippers, exporters, and importers (and everybody else in trade) can understand how to best leverage the global economy that we work with.
It's no longer about networking or going to a trade show, it is about being strategic and what conversations you can strike up and start getting to know other suppliers and importers.
What are some important trends to keep an eye on in the logistics, 3PL, and freight forwarding industries?
The first one is going to be increasing regulation, there are a lot of really exciting things, and this is probably the least exciting of them all, but in the US alone you have 30+ agencies in charge of regulating exporting and importing, and every country has their own regulatory agencies.
As you're forwarding cargo, not only do you have to know your limitations from the originating country but also those of the receiving country where goods are being imported also has a set of regulations there and freight forwarders have to understand the regulations on the other side of the supply chain so that they can best prepare those importers to be able to receive the freight and move trade as efficiently as possible.
Understanding data is another. There's so much data that comes back and forth when you think about even just one shipment, from shipping regulations, trace, pricing, type of cargo, relationship data, cost, and client data.
A lot of freight forwarders are not really capturing that data and as we move forward into the other trend, which is technology, the more data that you have at your fingertips, the better. And it's not just a matter of creating a random buffet of various data points, it is about being intentional about what kind of data points and learning to capture and translate that data so that you know what you're dealing with.
Even if it's just implementing a project management or a client management tool to be able to understand how volumes are going up or down and monitor in advance to make strategic decisions. This is something I've seen many small companies are not taking advantage of and "he who holds the data is the one with the key", so they should really focus on gathering that information to empower relationships.
Another trend, consolidations, and conglomerates in our fields are happening whether we like it or not. We're seeing very large companies either absorb or launch their own Customs brokerage and freight forwarding services, which I'm sure makes a lot of people really nervous. but remember, the relationships that you own are where you add value, and that's the differentiating factor and so people should really focus on those (leveraging their data!) for company stability and growth.
Obviously, a lot of people are talking about sexier topics like automation, machine learning, and drones and all of this technology that is coming through our feeds every day but, the robots are not coming immediately. It's important that we can learn how to intelligently implement technology without seeing it as a panacea or a one-stop-shop for fixing all of our problems.
As a smaller company, you can still play in an innovative field by being smart about the technology that you implement. It's more about understanding your existing processes and the way that you work and what happens, and when the time comes to automate something, you know how to automate it. Otherwise, you just fall to the wayside and lose relevance.
How do you see the responsibility of freight forwarders in the next 5 years?
One of the things is understanding consolidation, it's not just big companies looking to eat up smaller companies or knock them out of the market, but strategic alliances to be able to offer more services is really important.
As other countries look to strengthen their own production, freight forwarders will be able to help those producers and organizations find markets in other places that you may not be able to identify just from a quick Google search or putting your products blindly on Amazon or Alibaba.
Being able to deal with more small-scale production is going to be really important. Understanding your niche is another one. For example, some companies are really good with refrigerated goods just going to a small region or if you're doing project-based cargo, it doesn't necessarily have to be for construction or just for mining or emergency disaster response.
But that skill set is what makes you unique, so being able as a forwarder to understand what your strengths and being able to build work around you that can complement those that you know when somebody is looking for help in exporting "tractor tires", you know when it's your job and when it's not and that knowledge will help you to consolidate your own market.
What are some steps that Freight Forwarders should take in order to grow their business and get more opportunities?
If you think about the small freight forwarders and SMEs, a lot of times you have an owner who is very hands-on in their business, so a shipment doesn't go through without the owner knowing about it, nothing happens without a signature of approval, which to an extent is important when you're training and learning how to trust employees.
But, as you start building your team and making sure that your employees have access to the right resources to learn and be the most competitive they can be on the job, focusing on relationship building and those value-added services for your client is going to be key. We all know that profit margins are not the biggest for freight forwarders just on clearing export trade, so a good idea might be to start providing additional value-added services.
The more you understand your regulations and your particular environment as a freight forwarder, the more efficient you can be with your regulations. Let's say you can reduce your time for shipment by half and focus on increasing your capacity based on new efficiencies.
There are organizations like the Florida Customs Brokers & Forwarders Association, who live to serve Customs brokers and freight forwarders and seeing how to access the resources that these organizations can provide is key, especially when making sense of changing regulations.
Being able to network strategically, looking for information sharing and having those key conversations that are really going to impact the way that you run your business, those are going to be helpful from an internal operations standpoint. As soon as you identify your niche, let's say you're good with cables or computer components, then you can focus your outreach efforts on companies that service those components.
As global trade is growing and evolving, we need to understand what our strengths are and be completely secure in operating those, so people know when they need to reach out to us and we know when to and have a clear offering that we can provide to those who need us.
How could collaboration work within the freight forwarders' atmosphere?
Collaboration, unfortunately, is not always implemented well. It's not about working on the same things together. Once we understand what we're successful in, find people and businesses that can complement that. It's not about going to your competition and saying "let's work on the same things".
Rather, it is about being a team player and a community player, finding other services that round out your own in order to offer an improved package, working on enhancing operations.
Aside from those, it is about:
Being able to know what everyone is working on (internally)
Sharing what you've learned with other people -the more we uphold our industry, the stronger it's going to be
Offering the greatest service possible to your clients, so they understand why they're paying you, and they recognize that they're in good hands.
As a result of that, you get more trust.
Tell us about Florida Customs Brokers & Forwarders Association, Inc. and your role in it.
My background is in technology, startups, and nonprofit management. I have worked around and with these companies in different capacities for a long time. What we provide to our members here is increased credibility, so access to educational resources, opportunities, and information that could be valuable to their business and also the choice to further pursue micro certifications and learning curves to be able to grow in your profession.
Some of the things that they can benefit from are:
We provide connectivity for our members and represent them in conversations with regulatory agencies and authorities.
Collaboration and community, being able to access other people in the field to exchange experiences
Committees and credibility-building seminars and workshops, where we foster a safe space for our members with no judgment and no predatory actions. We simply seek to provide value to the trade and logistics ecosystem.