Ocean Carrier Alliances: What Does A Shifting Landscape Mean For You?

Ocean Carrier Alliances: What Does A Shifting Landscape Mean For You?

There are a number of reasons for some of the significant carriers to team up with one another (instead of directly competing). These alliances allow the carriers to pool cargo between them, and share their resources without trying to outdo the competition on pricing. Over the past decade, several carriers have made similar agreements with one another to take advantage of the opportunities working together affords them. We’ve been through several generations of major shipping alliances by now, and the latest is considered to have really begun in 2017. 

This latest generation included three major alliances—2M, Ocean, and THE.  

  1. 2M: Maersk, MSC, and ZIM. 
  1. Ocean: COSCO, OOCL, Evergreen, and CMA 
  1. THE: Hapag-Lloyd, ONE, HMM, and YML. 

These types of alliances have come and gone since the nineties, but this latest round is a bit different from ones we’ve seen before. The scale of the combined carriers is much wider than previous arrangements. 2M, for example, represents 30% of the world’s container trading capacity. This type of consolidation plainly has an impact on global shipping—and has, in some cases, raised antitrust concerns. Let’s take a closer look at the carrier alliances, and what the future might look like.  

The Biggest Alliance Benefit: Standardization 

One of the most obvious reasons for the success of franchises like McDonald’s is an essentially universal experience. Big Macs in Florida are just like Big Macs in Wyoming; it’s always familiar, which is comforting. But shipping practices and available technologies aren’t always identical between carriers. 

One of the most significant market-wide benefits of these alliances has been the expansion of digitization practices. Shipping a container with one carrier within an alliance is a much more standardized experience than it used to be. And with much of the shipping field allied with multiple partners, processes are now very nearly identical. This improved interoperability results in a much simpler experience for most customers, which can help make your own processes simpler in turn.  

Market Impact 

While carriers are enjoying benefits on their end and customers are receiving a more standardized experience, alliances aren’t necessarily helping the shipping market. The International Transport Forum—and inter-governmental organization (operating within the Organization for Economic Cooperation and Devolopment, or OECD) with 65 member countries dedicated to providing policy makers with accurate information and recommendations to improve the global transport system—released a report in 2018 titled The Impact of Alliances in Container Shipping. The report takes a negative view of alliances, indicating that they are not having a positive impact on global trade. 

The report indicates that these alliances are causing a number of market conditions that are unfavorable for their customers. Because the shipping industry has become much more tightly concentrated, competition is dramatically reduced. The sheer size of these carriers allows them to dominate shipping volume, creating a market imbalance that squeezes out other, smaller carriers who can’t compete within their individual shipping lanes. The concentration of shipping also leads to less efficient use of public infrastructure, reduced schedule reliability, and longer wait times for shipping. 

Shipping customers tend to want simple things: lower costs, reliable service, and speedy deliveries. The mere fact that options are reduced by the lack of competitive options makes those priorities harder to come by on the open market.  

Some Alliances are Ending 

While this isn’t exactly breaking news, the 2M Alliance is coming to an end. In 2025, when the terms of the alliance expire, they will not be renewed, and the largest carrier alliance will no longer be in effect. We’re facing some interesting changes in the global shipping industry. With 2M dissolved, suddenly the market will have significantly greater competition. It should also be noted that the other two main alliances may eventually follow suit. While there’s no news to report in that regard, it’s possible that they also elect to dissolve their agreements.  

Fewer alliances and greater numbers of individual carriers will mean some changes. First, as technology grows in different directions, it’s possible that we’ll start to see diverging experiences from one carrier to another. Since they’re no longer pooling resources, one carrier might invest in new types of digital tracking systems, for example, and offer their customers a more proprietary experience that another carrier can’t. And that’s just one tiny potential facet of what we might see. 

Greater market competition will allow individual carriers the opportunity to distinguish themselves from their competitors. Tighter, leaner operations might offer greater reliability, of course, which is always beneficial. But, for many shipping customers, the bottom line is where they focus their attention.  

While the end result of dissolving alliances won’t really be known until after they’ve ended, we can make some predictions on a number of aspects of container shipping. And it’s obvious from every market report that price competition is likely to be fiercer in the future. When carriers need to compete with one another, the simplest way to attract greater volume is with competitive pricing, along with better service. 

Fewer alliances and increased individual carrier operations will mean shipping customers will have more options than they’ve had in a long time. Pricing, service experience, customer relations, technology—when you have a less standardized experience, customers will find the best shipping partners for their business, something that is harder to do when you only have a few options. 

Of course, we strongly recommend working with a third-party logistics provider like OL-USA. As a single-source partner, we can help you find the right carriers for you at the right time—which might be harder to do in a landscape with increased competition. We can help you find and secure the best possible shipping rates with the most reliable carriers—without signing a long-term contract.  

Market Price, Contracts, and Budget Risks: What Did 2022 Teach Us to Expect in 2023?

Market Price, Contracts, and Budget Risks: What Did 2022 Teach Us to Expect in 2023?

Efficiency is extremely important to almost any business. It’s nearly impossible for businesses to scale without keeping an eye on costs in most aspects of their operations. So, naturally, that includes the cost of moving cargo—and that side of the industry has seen some serious ups and downs over the past couple of years.

It seems like our global economy encounters a Black Swan Event every couple of years for the past few decades. The pandemic set off a chain of events that some predicted, but many did not. In late 2021 and early 2022, we saw some impacts on the shipping and logistics industry that are going to change the way a lot of businesses allocate their shipping budgets in the future—including right now.

Spot vs. Bid: What Happened Last Year?

Historically, businesses have tended to work with ocean carriers on a contract basis. For example, if a retailer needs to ship 5,000 containers during the course of business for that year, they’ll typically negotiate with a carrier to handle the majority of that—often, that will be how about 80-85% of their containers will be priced. Businesses tend to do this early in the year, to lock in their rates and make sure they know what they’ll be spending on shipping.

The remaining 15-20% of their containers will usually be done on a more ad hoc basis—meaning they’ll be paying the standard market or “spot” price that’s available at the time. These rates are variable, and change based on the conditions on the ground (or in the water, or in the air), including availability. Sometimes these rates are higher than their contracted rates, but sometimes they’re lower.

If you don’t remember (it’s hard for us to forget), the tail end of 2021 and the beginning of 2022 saw a tremendous shipping crunch. Prices spiked, because availability had dropped precipitously. The contracted rates at the beginning of 2022 were, therefore, much higher than they were at the beginning of 2021.

Some major retailers negotiated shipping contracts with carriers that had relatively high rates—some were paying upwards of $6,000 per container. That’s a significant commitment for smaller retailers, many of whom were then forced to choose between limiting inventory restocking and forgo contracts, or take a chance that the market price for shipping rates was going to drop later in the year.

It turned out well for those who waited. The average spot price by the end of Q2 last year had cratered, all the way down to below $1,500/container. For those keeping score, that’s a 75% drop per container after a few months, when the crunch eased and availability began to bounce back. But those who were locked into contracts were stuck paying the negotiated rate that was set during the crunch.

Some of those businesses who were stuck in those contracts actually found it was less expensive to break their agreements, pay whatever penalties they were obligated to, and find open shipping space at the regular market rate. It’s unusual for just about any industry to find itself in a position where it’s cheaper to pay out for a broken contract than it is to stick to it; that’s usually the point of a contract in the first place.

What Does That Mean for This Year?

The situation from last year has made businesses extremely cautious, which is not a bad thing. This is the season during which ocean carriers are usually negotiating their main customers’ rates for the rest of the year. But we’re seeing some significant departures from “business as usual.”

Whereas many importers and exporters used to blend their agreements to a mix of about 85% contracted rate and 15% spot rate, last year’s experience is changing the way they do that. Instead, some are going half and half, or even majority spot/ad hoc.

There’s risk doing things that way (or any way, for that matter). If you lean heavily on spot prices, you’re essentially betting that the rates will drop below what you’d be able to negotiate today. On the flip side, those who lean heavily on contracted rates are betting that the spot rate is going to spike later in the year.

These organizations are reading their tea leaves and examining the state of the world while they make their decisions. Is inflation going to continue being a concern? Will the political state of play stay the same, or will there be some upheaval in key regions? Will consumer demand increase, drop, or hold steady? Will existing inventory hold long enough, or will you need to restock sooner rather than later?

Every industry, sector, and individual business will have their own way of looking at these types of things, each with slightly different aspects that will matter to them. The Recreational Vehicle industry, for example, will probably focus heavily on their expectations for consumer demand (which dropped significantly during Covid, but is starting to rebound). Meanwhile, the clothing industry might be more concerned about their existing inventory than demand.

Whatever the case is, you need information before you commit to a strategy. We’ve always recommended working with a stable partner who will consult with you and all of the key players for your business, because that’s the right way to plan ahead. It’s extremely risky to make a decision unless you know the facts and consult with an expert. OL, as always, is ready to talk things over with you, give you the information you need, handle the negotiations on your behalf, and take care of all of the details for you.

To find out more, contact us! We’d love to talk.

The Biggest Technological Advancements that will Impact Shipping and Logistics

The Biggest Technological Advancements that will Impact Shipping and Logistics

Shipping and logistics are caught between the old and new industrial complex – but with several high-profile, high-tech capabilities, solutions, and implementations beginning to roll out en masse, 2023 is shaping up to be a major industry turning point. 

This accelerated transformation comes on the heels of heightened global growth, touching every corner of the business. On the heels of pandemic-powered demand as consumers overwhelmingly shifted to e-commerce. This year alone, the industry is tracking to a 7.9% compound annual growth rate (CAGR), anticipated to be up $1.15 billion year over year – and that meteoric growth is showing no signs of slowing down. 

While the financial gains are positive, they come at a cost. The boom in e-commerce has changed supply chain expectations from end to end, pushing those in the “last mile” to do more in less time with less friction, ensuring a better overall customer experience. It’s a tall order, especially in an industry deeply impacted by the labor shortage. 

At the same time, these gaps and heightened expectations are inspiring new, cutting-edge solutions to ensure the industry can continue scaling – and many of those solutions are already being tested by some of shipping’s biggest players. The trickle-down to mainstream is inevitable, especially given sustainability regulations and other policies impacting the global and domestic supply chain. And that’s putting all eyes on what’s new, what’s next, and what we can expect in 2023 and beyond – starting here: 

#1. A shift to (meaningful) sustainability

It’s impossible to look ahead without considering the impact of sustainability regulations on the logistics industry. California’s latest regulation mandates that, by 2045, all heavy- and medium-duty trucks should be zero-emission. From a green perspective, it’s a significant move – approximately 20% of global CO2 emissions come from transport and nearly one-third of that from cargo freight.  

While still decades away, PepsiCo recently dove into decarbonization – and the impact on the entire industry could be significant. The global food and beverage manufacturer and distributor recently integrated its first patch of Tesla Semis. Designed to support heavy-cargo vehicles over long distances, these electric vehicles can charge 70% of its range – about 350 miles – in 30 minutes. 

Supporting this fleet will be a national network of 1MW semi superchargers and solar-powered mega charger locations. PepsiCo’s latest electric semis can haul up to 81,000 pounds of cargo for 500 miles. In addition, Tesla’s semis offer a host of efficiency-focused smart features, including Autopilot for more comfortable driving, several sensors, cameras for safer, easier reversing, and low-speed driving, and an interactive Tesla touchscreen. 

This initial test drive will be telling – for both PepsiCo and the entire hauling industry. At roll-out, the Tesla Semis will service two facilities only, Modesto and Sacramento. And while the 500-mile range is impressive, it’s still half that of a diesel truck, which can travel more than 1,000 miles on one refuel. To maximize distance per charge, electric semis would require more batteries, which would likely impact fuel efficiency. 

#2. Self-driving semis 

Self-driving vehicles have been buzzed-about for the last decade-plus, with Google kicking off its autonomous car initiative in 2009. But tackling autonomous long-haul trucks is a much bigger challenge. 

At the same time, it’s a challenge that industry leaders and innovators are already getting behind. The U.S. Department of Transportation recently invested $100 million in autonomous car research. At the same time, the American Trucking Association sees autonomous vehicles as a potential large-scale solution to overcome the mass driver shortage. Currently, the industry is short about 78,000 drivers. By 2030, that number could be as high as 160,000 for the long-haul sector alone. 

Self-driving trucks could also help overcome human error, responsible for thousands of deaths annually while promoting greater efficiency – robot drivers don’t need breaks – and, with it, shorter delivery windows: an autonomous New York to Los Angeles haul could take as little as 48 hours, versus five days when led by a human driver.

While the technology has already been tested and adopted by several companies, including Uber Eats and Domino’s, the focus has predominantly been on short-distance deliveries. Likewise, Tesla has been testing self-driving semis since 2018, with long-haul options, according to Founder Elon Musk, coming soon. Also being explored: self-caravaning trucks, offering better driving and fuel efficiency, but with a human driver available to take over when needed. 

Regardless of the format, self-driving technology is rapidly evolving, with an eye on becoming more and more mainstream fast. By 2027, the semi- and fully-autonomous truck market is expected to reach $88 billion

#3. Automating every step of the journey

The recently added pressure on the global supply chain has pushed industry leaders to think big, leading to rapid advances in AI, IoT, machine learning, and data analytics. 

Some organizations are already diving in, using AI to identify damaged cargo or to load and unload containers. Similarly, logistics leaders are starting to integrate machine learning technology to eliminate tedious but mission-critical tasks from their day-to-day operations. Demand forecasting models or demand sensing can be built to continuously learn and make relevant real-time decisions. This same approach can be used for inventory and warehouse management and even logistics management – tracking cargo locations from label creation through delivery – and fraud prevention, assessing large volumes of data, and looking for duplicate vendors or charges. 

#4. Integrating big data analytics 

Jumping off of the increased AI and machine learning capabilities, data and analytics will undoubtedly have a significant role in strategic planning and real-time rationalization industry-wide. By integrating smart vehicle technology and optimizing existing access and insights, logistics companies can streamline routes, better estimate delivery times, and spot potential hurdles, be it questionable infrastructure or unexpected slow-downs. 

The good news: in most cases, companies already have access to meaningful data and analytics – it’s more about navigating the numbers to maximize value. Tap your fleet management and maintenance teams, HR, finance, and even the vehicles themselves and see what insights can be culled. With this multi-faceted view, it’s often easier to identify areas for system improvement. 

This insights push will likely be supported by 5G network infrastructure and the mainstreaming of IoT devices. Together, this will promote more energy-efficient, cost-effective systems with end-to-end, cross-platform connectivity enhanced by IoT services.

With the rapid industry growth and acceleration, these high-tech solutions and capabilities have become increasingly critical to supporting scale, efficiency, and overall consumer experiences. By integrating more sustainable and, potentially, autonomous vehicles as well as deeper, actionable insights, shipping and logistics companies can elevate and accelerate their workflows and processes and better prepare to meet continuously-mounting expectations. 

How Will Changing Environmental Policies Impact Shipping and Logistics?

How Will Changing Environmental Policies Impact Shipping and Logistics?

The reality? The logistics industry is notorious for stirring up less-than-positive environmental press. And considering a single Capesize Bulk Carrier uses 40-plus metric tons per day—and releases about 33,000 tons of CO2 in a single year—that shouldn’t come as a surprise.  

The global shipping industry generates about 4%-5% of the total carbon dioxide emissions created by human activity. It’s also a massive contributor to sulfur oxide (SOx) and nitrogen oxide (NOx) emissions. Then there’s airborne pollution, especially around coastal areas and highly-trafficked ports.  

While it seems black-and-white, moving to green logistics is more complex. Because while shipping and logistics are being pushed to “clean up,” it’s simultaneously hurtling towards another breakpoint as consumer demands skyrocket—especially when it comes to the retail supply chain. Pandemic time demands pushed the global supply chain to its limit and introduced consumers to the simplicity and efficiency of on-demand eCommerce. And there’s no going back.  

That’s the critical balance: accelerating shipping and deliveries to satisfy consumer demand while considering the increasing environmental pressures of this growing industry. 

Now, though, there’s a third consideration gaining momentum worldwide: cast-in-stone environmental policies set to transform shipping and logistics. From regulatory mandates to emerging tech best practices, the industry’s future and how cargo moves are under the microscope.  

Your role, then? Understand the modern landscape with an eye on the complexities, controlling factors, and evolving environmental policies driving what comes next—specifically, the government, consumer, and industry-specific forces looking to define the way shipping happens.  

1. Government Sustainability Targets

Underscoring much of the conversation are government regulations and emerging sustainability initiatives. Chief among them is the 2015 Paris Climate Agreement. Legally binding—and agreed to by 196 countries—this international treaty strives to keep this century’s global temperature rise to 1.5℃-2℃.  

Since freight transportation is responsible for about 11% of all global greenhouse gas emissions and 20% of black carbon, all eyes are on international shipping.  

Considering carbon budgets, getting to a zero-emission state—which syncs with the Paris Climate Agreement’s global warming goals—is possible. But it requires an immediate shift to scaling new technologies, efficiencies, and alternative fuels. And that means allocating the resources, budget, and people power right now. Possible? Potentially—for some organizations. Others may need more time, support, and hands-on guidance to promote these transformation shifts.  

Regulatory pressure is also coming from the inside. The International Maritime Organization (IMO) has been laser-focused on mitigating shipping emissions and reducing sulfur content in fuel oil. Per IMO requirements introduced in 2020, ships’ fuel must contain no more than 0.5% sulfur. Their experts argue that this will provide ongoing environmental impacts and public health benefits, including reductions in childhood asthma and lung cancer deaths.  

2. Consumer Pressure for Reduced Carbon Footprints – and Greater Performance

Like government pressures, consumers are another key driving force behind changing environmental demands. Eighty-five percent of global consumers admit to evolving their purchasing behaviors, favoring more sustainable companies. They seek out businesses with clear-cut environmental, social, and governance (ESG) strategies and public roadmaps tracking their green goals—even from shipping and logistics providers

  • 91% of e-commerce customers want eco-friendly shipping options at checkout 
  • More than half would pay an additional 10% for these green services 
  • 73% who indicated green behaviors aren’t important to them would still like to see sustainable shipping options   

3. Industry Insiders and Employees

The push towards more sustainable practices is coming from the inside—and in today’s competitive, candidate-first environment, this commitment can be a competitive advantage. Sixty-eight percent say they’re more likely to accept a job at an environmentally-friendly organization.  

Respond To Mounting Internal and External Pressures

While these regulations and demands from consumers and employees inspire countless global conversations, there’s no one switch to flip. Transforming shipping workflows and best practices to improve sustainability must also consider methods for maintaining or improving service—and infrastructure durability.  

We can’t compromise construction, deliverability, and design speed for short-term emission reductions. In the U.S. alone, shipments are expected to increase by nearly 24% by 2025 and 45% by 2040.  

However, some organizations, ports, and governments are diving in head first, committing to significant investments in initiatives like “ports of the future” in France. Here, maritime, waterway, aeronautic, and land-based transportation come together to preserve space and environmental impact.  

These ports are in-step with the French government’s own Stratégie national bas Carbone (National Low-Carbon Strategy), which seeks to curb industrial sector emissions by 35% over the next eight years, and 81% by 2050. Doing this means complete decarbonization in maritime transport—and, already, it’s posing a significant technological challenge, especially with maritime transport expected to increase by up to 40% during the same period. Total adherence to these environmental standards could leave the industry and key French players vulnerable.   

Others are choosing to get ahead of any potential roadblocks. With the introduction of the La Rochelle Zero Carbon Territory project—a push for the greater La Rochelle area to be carbon neutral by 2040—the local port has already begun implementing initiatives to curb its energy-related emissions.  

Next Steps: What Should You Do Today – and Tomorrow?

By understanding the environmental pressures impacting shipping and logistics, your organization can better prepare for what comes next and how you can and should respond. Economic, political, and financial considerations will undoubtedly contribute to individual businesses’ moves to green logistics. But regardless of where a company falls, the next 12-24 months will mark a seismic shift in the industry as a whole—and that means all organizations and stakeholders must commit to rethinking processes, workflows, and operating models, with sustainability considerations in mind.  

No matter your exact path forward, there are negatives and positives—and more than just environmental and public health considerations to account for. Done right, though, companies can strike a balance, making positive strides to better the global community—and their bottom lines.  

Need help mapping out your next steps? OL USA can help. With both a big-picture global understanding of the current and emerging policies, regulations, and initiatives driving the future of shipping and logistics—and teams on the ground in key local markets—we can help navigate today and tomorrow. Let’s talk

Top 5 Freight Forwarding Best Practices

Top 5 Freight Forwarding Best Practices

Whether you are a seasoned veteran or planning your first international shipment, the freight forwarding process can be challenging to navigate. Even the slightest hiccup along the way can cause significant delays, damaged goods, and higher costs.

Given these high stakes, it is vital to minimize your chances of encountering problems. By following industry best practices, you can avoid many headaches and be better prepared to handle the unexpected. Here are five ways to help ensure your next shipment arrives on time and within budget.

Estimate, Do Not Guesstimate

We all know how sensitive costs are when doing business. Many factors determine your freight forwarding costs, including:

  • Mode of transport: The method you use to transport your goods ultimately depends on the cargo you are shipping, the distance for transport, your budget, and other requirements. Each form of transportation features different rates, ranging from air freight at the high end to ocean freight as the most cost-effective.
  • Shipping distance: Shipping distance is another critical factor in your freight forwarding costs. Storage costs, fuel charges, and port tariffs increase costs for transporting goods across borders. Also, note that more popular shipping routes are typically more affordable than less utilized shipping routes.
  • Type of cargo and weight: Other critical factors include the type of cargo and its weight. If your cargo is perishable, oversized, requires special handling, or is hazardous, your costs will be higher. Your chargeable weight will be determined by the greater of your actual weight or the dimensional weight of your goods.

What You Can Do

Calculating your costs is not always easy, as many variables affect this calculation. This is why it’s critical to ensure you are working with current information. Before determining your rates, make sure you have the most current data available. Otherwise, you risk facing higher charges and smaller margins.

While air transport is generally quite reliable regarding departure and arrival times, delays can happen. Inclement weather, congestion, and political events can cause bottlenecks, which can have severe consequences if you are unprepared. Be sure to factor your timeline into shipping decisions to ensure you have room to handle the unexpected.

Confirm the export and import tariffs on your goods with each relevant country involved in your shipping process. These extra charges change and can negatively impact your bottom line. Although double-checking this information can take time, errors represent avoidable headaches.

Watch Your Regulations and Licensing

When freight forwarding crosses borders, your cargo must meet all applicable regulations of the destination country. Determining which rules apply to your shipment can be a complex process. While many standards must be met regardless of what you ship, other regulations apply to only specific goods.

For example, exports from the U.S. are subject to many regulations and export control laws. Dual-use commodities and technology subject to the Export Administration Regulations (EAR) could require you to secure a license for export. Goods related to national defense demand a license under the International Traffic in Arms Regulations (ITAR).

Penalties for failing to comply with regulations and licensing requirements can be steep. In addition to the business-related problems caused by such oversights, your goods may be confiscated, and you may even face fines and jail time.

What You Can Do

Confirm with the destination country any regulations, standards, and licensing requirements you need for shipping your goods before beginning the freight forwarding process. Check into whether any imminent changes are likely to affect your shipment to help mitigate any potential issues.

Most industries are controlled to some extent, and the degree of monitoring varies according to the item. Double-check to be sure that you have the proper licensing required for importing or exporting products. Also, ensure your goods are packed properly to meet all shipping requirements.

Consider how international events and international relations could affect the shipping of your goods, and factor this uncertainty into any freight forwarding decision.

Document, Document, Document

Specific documents are required in global shipping for various reasons. First, documents make up the contract of carriage, including all particular clauses related to the transportation of goods. This paperwork also serves as proof that goods have been delivered. Not only that, but it also verifies that, even after sometimes weeks of transport, the goods have been delivered in acceptable condition. Perhaps most importantly, your documents serve as proof of ownership for the cargo being transported.

Here is a look at some of the most important documents used in freight forwarding:

  • Import/export declaration: An import or export customs declaration states the essential details of the goods being transported. It is crucial for customs clearance and in calculating any duties that apply to a shipment.
  • Commercial invoice: A commercial invoice is one of the most important documents in shipping goods internationally by sea. It provides proof of sale from the exporter (seller) to the importer (buyer). This document is needed for customs clearance.
  • Bill of lading: A bill of lading is a transportation contract. It states that the cargo carrier received goods from the shipper in usable condition and gives the document holder rights to control and manage the goods.
  • Certificate of origin: This document states which country the goods were manufactured in. It includes product information, destination, and country of export, and it helps determine whether a shipment is eligible for import and any duties that may apply.

What You Can Do

Knowing what forms you need is not always an easy task. Ensure that your customs documentation is accurate, up to date, and complete.

Collecting your documentation is one of the simplest ways to save yourself a lot of time, money, and headaches later on. It is much more cost-effective to get it right the first time than to collect the required paperwork as your cargo sits in a warehouse, incurring storage costs. After all, a pinch of prevention is better than a pound of cure.

The First Mile is as Important as the Last Mile

Freight forwarding involves many moving parts that often include the combination of rail, road, air, and sea freight. The delivery process is complex and requires the successful delivery of goods at every step to ensure each shipment reaches its final destination safely.

Businesses have realized the importance of last-mile delivery in providing a positive customer experience. However, the first mile is often overlooked as it does not involve the same intimate contact with customers.

Common Oversights of First-Mile Logistics

Given the importance of the first mile to the cost of goods sold (COGS) and its impact on every subsequent step in the freight forwarding process, its lack of prioritization in many companies represents an incredible opportunity to improve business practices.

Here are some of the areas that often get overlooked in first-mile logistics.

  • Proper packaging: It is crucial to properly package goods to prevent damage or loss during transit or the loading process.
  • Correct labeling: Accurate labeling is essential to guarantee suitable shipping and handling of goods.
  • Planning for congestion: Careful scheduling is vital to ensure the smooth flow of shipments.
  • Preparing documentation: As mentioned earlier, documentation is a critical area in freight forwarding. Not preparing everything that’s required can cause delays, fines, and other penalties.

What You Can Do

Do not make the mistake of overlooking any step of your freight forwarding process — from start to finish. Your costs depend on each step and not just the final mile. So spend your time and money looking for ways to optimize each node of the transportation process.

Work With the Right Partners

Every shipment differs in terms of services required for successful transport. It takes a great deal of finesse to navigate the logistics landscape to determine the optimal solution for your needs.

With so many stakeholders involved and steps along the path, it is vital to work with the right people. Tapping into experienced partners and established networks makes freight forwarding much more efficient and problems easier to avert.

But choosing partners can sometimes feel like traversing a field full of land mines. How can you choose the right partners for your needs? Many areas need attention to make sure you choose what is best for your business:

  • Check reviews: You should not base your judgment of a potential partner solely on its website. Collecting feedback from former clients is often a much more reliable source of information.
  • Do not overemphasize fees: Of course, your costs are essential. But low cost should not be your only criterion in choosing partners. Be sure to factor in experience, delivery time, insurance, and services offered.
  • Examine expertise: You need to consider what exactly you need. There is no need to work with the best air freight logistics provider if transport cost is critical to your business. Seek out experts in your areas of need.

What You Can Do

It often makes sense to partner with logistics experts to realize cost savings and added convenience. Choosing partners with extensive logistics networks can make your life much easier. Spend the time up front to select partners that best serve your needs.

We Are Here For You

We know how complex freight forwarding can be. But OL USA can help. Sign up for our newsletter or contact us today to see how we can help your brand. We’ll work with you to determine your transportation and freight forwarding needs so we can tailor our services to suit you best.