Risk Management Tips for Freight Forwarders in the Post-Pandemic Economy
Freight forwarders are an integral part of the global economy. Global trade would not function without their logistical expertise.
But as the world shifts to globalization, supply chains are becoming more complex. How can freight forwarders deal with old and emerging trends? Here are risk management strategies for freight forwarders in the post-pandemic era.
Identify Supply Chain Risks
Freight forwarders face an increasing risk of disruptions to their supply chain. Besides the traditional threats like the lack of contingency planning, there are other emerging challenges, such as cybersecurity.
The first step in developing a risk-management strategy is identifying the most significant supply chain risks. These threats have far-reaching implications on a freight forwarding firm’s short-term profitability.
The challenge with developing a robust system is the vast scope of the potential threats. It may seem overwhelming to document the firm’s internal and external threats.
But freight brokers can demystify the process by adopting a structured approach when gathering data. A structured approach involves documenting all risks and designing a scoring methodology to determine the impact of the threat.
The purpose of a scoring system is to isolate high-risk products in the supply chain and anticipate disruptions.
Develop a Resilient Supply Chain
The vast scope of supply chain threats suggests that not all disruptions can be avoided or eliminated. According to industry analysts, a resilient supply chain is, therefore, one that can bounce back after disruptions.
The key is to approach risk management from the perspective of the firm’s capabilities. That is as opposed to defining risks according to external and internal threats.
For example, the risk management strategy may involve developing capabilities such as working with multiple suppliers or acquiring safety storage.
The idea is to shift the focus from the risks to the existing capacity of the freight business. Understanding the organization’s potential and limitations is essential to deploying timely and practical solutions.
While implementing these measures may require capital, a resilient system can give freight forwarders an edge over their competition. In the event of a disruption, freight forwarders can demonstrate their firm’s reliability to potential clients and boost their bottom line.
Understand Trade Compliance Risks
The global economy presents a complex and dynamic environment with many compliance risks. Additionally, freight forwarding companies often work with several parties to guarantee the best services for their clients.
Sometimes, their business partners are across multiple jurisdictions. Regulators have come up with low-sulfur fuel regulations to address concerns over environmental pollution.
Freight forwarding firms should be aware of how new rules can affect fuel prices. Regulations are always changing, and monitoring new laws across jurisdictions can be complicated and time-consuming.
The lack of access to real-time data can also be a significant disadvantage for freight forwarders. However, firms can leverage technology to access real-time information.
The latest digital tools may have automated compliance checking features. Also, consider decentralizing the data system to allow all parties easy access to the system.
Wikifactory is an open-standard platform that facilitates engineers, developers, and organizations. Various parties can communicate from a single platform to develop a product or enhance supply chain logistics.
Freight forwarders must have a surety bond to comply with FMCSA (Federal Motor Carrier Safety Administration) regulations. Choosing the right freight broker bond is critical for eliminating compliance and reputation risks for the firm.
Review Your Risk Management Strategies
The pandemic has affected virtually every aspect of supply chain logistics. The impact of Covid-19 on the economy is forcing freight companies to evaluate their logistical priorities.
Business continuity planning and automated solutions are among the top priorities for freight companies. Freight forwarders should continuously review their risk management strategies and anticipate new, emerging threats.
Regular monitoring is critical for identifying the indicators of supply chain disruption. They must document new threats in the risk scoring system and update the risk management framework. Tailor your risk management strategies to fit the organization’s tolerance for risk.
The system must factor in threat impact and preparedness, among other factors. The global economy presents many challenges for freight forwarding businesses.
The best approach is to focus on the organization’s capabilities rather than threats and challenges. Regularly reviewing risks will improve the firm’s resilience to emerging challenges such as cyber security.
