Mitigate Forwarding Risks with Integrated Freight Management Software

Amit Maheshwari, Softlink Global CEO

You won’t see a skydiver jump off a plane without a parachute and a reserve chute because the skydiver understands the risks and plans well to minimize them.


All activities and businesses come with risks. But making plans to manage these risks makes the ride less anxious. Likewise, freight forwarders, too, take on activities with risks, which are encountered at every step along the way.


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 can appreciate the massive tasks carried on by the forwarder, also consider in-transit risks like cargo loss, cargo damage, cargo abandonment, and even fraud, which are very common. You may think insurance will cover all these incidents but the answer is a surprising no.


In the following space, I will throw light on how freight forwarders can manage risks fora 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 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 using technology to oversee container movements.


Communication risks

 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.


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 dealing with volumes tedious. This is not to mention the impatience with which a customer expects a reply to their quotes, which adds 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 it needs to travel to reach its destination, documentation must be spot on. Readily producible and accurate documents 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 for the sending of 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. By using software solutions, empty drives and missed cut-off times can well be avoided.


Cost calculation and payment

If a certain percentage of discrepancy is found between the verified gross mass or VGM and weight in shipping instruction, weight discrepancy fees amounting to about US$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. With intelligent freight systems, forwarders can prevent minor losses from becoming bigger holes in the profit pockets.


Despite the stated or known risks, there are places where the freight forwarder can slip up and must bear the consequences. The use of integrated freight systems is a necessity to manage risks well in an increasingly competitive environment.