How to Build a Profitable Freight Forwarding Business

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What’s in the Article: 

In a world where the customer is the king and the opportunities available for the customers are abundant, it would be prudent to know what customers expect and tailor your offerings to suit their requirements. Similarly, freight forwarders must understand what the shippers are looking for and use available technology to enhance their services. 

In 2022, the global freight forwarding market was 169 billion euros. This trend is on an upward rise until 2025 and is expected to increase by over 22% to 207 billion euros during these five years.

Being able to carve out a small part of this massive chunk would be the goal for any SME freight forwarder. 

What do shippers expect from a freight forwarder?

A good starting point to identify the key aspects would be to understand why customers choose freight forwarders.

As per the logistics trends and insights, 44% of customers who use freight forwarding services say that they value the trade expertise of the provider or the low rates they are given. Another 18% prefer the ease and time-saving that exists when booking freight within the industry. 

Being non-asset-based, the freight forwarding sector can potentially face high rivalry from other players. Funding funneled towards technical advancements and innovations that use machine learning or AI makes the industry more competitive. With lower barriers to enter the market, the new equation envisages multiple players fighting for a share in this business and dropping the profit percentages to build a lucrative model. 

This blog explores the top 3 things that a freight forwarder should know about his customer to maintain and build a valuable business relationship. The base for any profitable business is the association that freight forwarders can keep with their shippers. This also becomes the only feasible approach to differentiate oneself in an aggressive market and retain customers. 

The three exhaustive and broad categories can be classified as:-

  • Transparency in rates
  • End-to-end visibility
  • Strength of the logistics network

Ultimately, this customer-forward strategy will result in increased customer success and upward sales trends. 

Transparency in rates

Customers are keen on analyzing where they spend money the most or where cost minimization is possible. Keeping with the global trends, shippers will feel more privileged if they find transparency while interacting with freight forwarders. 

The relationship between a forwarder and a shipper needs to be built on trust. Shippers will gravitate towards those forwarders who go out of their way to help shippers navigate the challenging logistical frontiers. 

Providing accurate quotes by taking advantage of the quote management and the rate management systems is key. The benefit will be double-fold – shippers get the transparency they are looking for and forwarders can provide instant quotes without losing time. 

With a systematized rate management tool, additional fees or any charges for delays and cancellations can be called out individually. This helps customers track which aspect of their freight cost needs to be watched. If there are any extra rates for non-standardized freight, this can be singled out in the quotation, so shippers can pack their cargo better. 

Additionally, by providing periodic reports and trend analyses to the shippers, freight forwarders can stabilize their relationship as dependable logistics partners. These reports can range from a history of rates for a set route to shipping schedule changes. All the insights regarding the customer’s shipping behavior ultimately will have a corresponding impact on rates that can be forecast in advance with the right data sets. 

End-to-end visibility 

While transparency is a key differentiator, visibility is equally important. Knowing where their shipment is stuck or when it is expected to arrive are the most common questions a shipper will ask. 

Customers might require re-scheduling services, or they might even want to know the various schedules available before they plot their shipment plan. All these answers and more can be provided by freight forwarders through track-and-trace software.

With port congestion and delayed turn-around times, shippers would demand to know how long it takes for a package to reach so that they plan. As a freight forwarder, it is important to provide immediate responses to these questions to the shippers. 

Additionally, having all the rates and schedules from all carriers on a single platform provides further visibility for the customers. 

They might also need support in terms of the documentation required for freight movement. Freight forwarders should be able to provide visibility on the paperwork that they help shippers with and keep documentation standards consistent and up to date. 

Strength of the logistics network 

Customer satisfaction can be achieved when providing a wide range of services. Apart from the obvious transparency and visibility requirements, it is also important to provide industry knowledge and insights. Expertise that shippers look for includes global regulations, market trends, future of the industry, best routes, shipping restrictions, packing requirements, etc. 

Solving simple problems that shippers might have with on-point advice makes the difference. The network that a freight forwarder is associated with speaks abundantly in today’s aggressive market. 

Customers or shippers would want to side with freight forwarders who have a large network of carriers that can support them. The benefits that freight forwarders can pass onto their customers because of the relationships that they have built in the industry will retain a customer. 

The Bottom-line

The flexibility and scalability of digital offerings provided by freight forwarders make the difference.

Forwarders should also be able to understand the feasible solutions at hand and help customers with their holistic decision-making process.

Every task can be performed either by a machine or manually - by guiding shippers to choose the right fit and optimizing the available resources, forwarders can establish their presence in the market. Hence, customizing automated forwarding techniques is key for personal relationships to be built with the customers.

The value add comes when a freight forwarder can also provide market insights along with traditional freight forwarding services. In a market where customers are spoilt for choice, they prefer choosing freight forwarders who can build custom-based services and troubleshoot their queries all the way. 

As a logistics tech provider, Freightify assists freight forwarders with automated solutions that enhance their service delivery. Using the customer portal, forwarders can build a unique sales channel that offers end-to-end support to their customers. The Freightify solution includes various dashboards, round-the-clock communication, real-time quotes, online bookings, and even internal performance tracking. 


1. What are the available digital opportunities that freight forwarders can take benefit from?

Freight forwarders can digitize their processes by using rate management systems and quote management systems. They can also implement the track and trace software as well as online document storage sources. Other technological advancements for freight forwarders include freight brokerage software and automation-based tools. A detailed listing of this year’s best logistics startups that provide digital solutions for freight forwarders can be found here

2. What is the CAGR at which the freight forwarding market is expected to grow this decade?

The freight forwarding market is expected to register a Compound Annual Growth Rate (CAGR) of more than 4% during the forecast period. This rate includes the impact of Covid-19 and the future business possibilities in the global market. Further, the fastest-growing market is the Asia Pacific region. 

3. What causes the freight spot market to be dynamic?

Apart from regular market factors like demand and supply, economic stability, or seasonality that affect the spot rate, the logistics industry is impacted by other factors including government norms and political events. The cost of labor, fuel and the vessel’s capacity also drives the price. Freightify has explored and analyzed the factors driving the spot market in this blog

4. What type of customers can a freight forwarder provide services to?

The freight forwarders’ main tasks are to advise on freight costs, plan the appropriate route for a cargo movement, reserve and book the best shipment schedule, help with insurance and documentation, and guide shippers through various government regulations and socio-political situations. Freight forwarders can provide these services to all customers irrespective of the mode of transport, type of cargo, or the size of the business.

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