Changes in the domestic marketplace are driving changes in the freight forwarding arena. According to Doug Brittin, vice president marketing and business development with Emery, logistics issues are teaming with the economy to cause this shift.

In a quest for lower costs and increased profits, companies are doing a better job of load planning to reduce their shipping costs. Better planning leads the current trend away from overnight heavyweight air. Instead, savvy shippers are using second day and economy shipping, notes Brittin. He suggests companies can still ship just in time with longer shipping times if the pipeline is secure and reliable.

In a slumping economy, a boon to the shipper is improved software to facilitate better shipping decisions on the dock. Brittin has seen increased use of software to pre-select carriers by size of shipment, destination, needed speed, and other shipping parameters, thus automating the decision at the dock.

Gaining Efficiency While Reducing Costs

Even though shipper's use of air freight continues to climb, Brittin claims there's a shift from smaller, more frequent shipments to larger, slower shipments with an increasing need for visibility in transit. "Information and visibility are almost as important as transportation itself," he concludes. "Shippers demand more and more information but no one wants to pay more for it," says Brittin. "Cost reduction is a perpetual innovation process. If we can reduce the steps in scanning, use fewer processes in accounting, use electronic payment, or track and trace via the Internet, we can reduce our costs. We still have to provide people contact, but a large number of shippers now are happy to just check on the Internet."

Another critical reason for better access to information is security. "The whole issue of security has a major impact," says Brittin. "It changes the way we handle a shipment and register known or unknown shippers." Brittin cannot divulge the process by which an unknown shipper becomes a known or preferred shipper, but he hinted it includes physical inspection of the shipper's premises. The process is lengthy but worth the effort. Freight from an unknown shipper, for example, cannot travel in a passenger environment.

In the name of security, new government regulations and mandates are now a way of life, notes Arnold Davis, principle with AD Strategic Communication. "The bill of lading must be accurate; all products must have full security and routing data, and everyone must know where and how the freight is moving."

The increase in security measures adds costs as well as time and inconvenience. Brittin points out all international carriers tack on security surcharges that have to be passed along to the customer.

Linking Systems

Today, passing along information is a crucial element of supply chain management. The need for visibility is completely changing freight forwarding. "Freight forwarders need to control every aspect of the transportation mode," says Davis. Shippers and freight forwarders must decide whether this capability is a core competency. New software and services available through application service providers (ASP) are making visibility easier for shippers and freight forwarders alike. Dramatically lowered costs are a bonus.

Perhaps one of the greatest strengths of ASPs is their ability to bridge incompatible systems. Davis suggests ASPs are developing programs to make client companies' internal programs more flexible, more useable, and more functional with other needs of the company. They can, for example, bring together all the diverse functions to create a basis for auditing payment.

From security issues to software for better service, freight forwarding is a rapidly advancing field.

Sidebar 1: Total Logistics Revenue (FY 2001)

• Exel plc
  $6.5 billion
  
• Kuehne & Nagel Inc.
  $1.727 billion
  
• Danzas Solutions
  $1.324 billion
  
• Panalpina
  $1.068 billion
  
• Frans Maas Network & Logistics Services
  $847 million
  
• Menlo Worldwide Logistics (Emery)
  $708 million
  
• EGL Inc. (Eagle)
  $644 million
  
• Expeditors International of Washington Inc.
  $607 million
  
• APL Logistics
  $420 million
  
• Schenker Inc.
  $400 million

Source: Armstrong & Associates' "Who's Who in Logistics," 2002 edition

Sidebar 2: In the Know

For the past 10 years, Armstrong & Associates has published an increasingly sophisticated "Who's Who in Logistics." The 2002 edition contains detailed information on more than 30 new European and Asian third-party logistics providers, including freight forwarders. Also new to this edition is a ratings system that gives readers the benefit of Armstrong's experience with 3PLs. The editors assign ratings from capable to excellent as well as listing strengths and weaknesses of the 3PLs.

For example, Basel, Switzerland-based Danzas Solutions, a freight forwarder since 1815, is rated a capable lead logistics provider (LLP) with a European focus. Armstrong rates the UK's Exel plc a very good global LLP, one of the top ten in overall ability and geographical reach. He notes Kuehne & Nagel is a good forwarder with very good 3PL operations. Netherlands-based Frans Maas is considered a capable European-centric forwarder and 3PL.

Stateside, Panalpina qualifies as a good freight forwarder and 3PL with global reach and Swiss fiscal conservatism. Schenker earned a rating of good international freight forwarder with some 3PL abilities. NOL Group's APL Logistics is considered a good international freight forwarder combined with a very good 3PL. Armstrong rates Expeditors International of Washington very good to excellent as an international forwarder with Asian inbound supply chain management. Menlo Worldwide Logistics (including Emery) is considered very good at supply chain management and as an LLP. EGL (Eagle) is best at domestic U.S. airfreight forwarding.

Armstrong & Associates is a logistics management consulting firm specializing in outsourcing projects. Visit them online at www.3PLogistics.com.

Sidebar 3: Leading Freight Forwarders

Kuehne & Nagel Inc.
10 Exchange Place
Jersey City, NJ 07302 USA
800-228-3695
www.kuehne-nagel.com

Exel plc
Ocean House, The Ring,
Bracknell, Berkshire RG12 1AW U
44-1344-302000
www.exel.com

Danzas Solutions
Peter Merian-Strasse 88
Basel CH-4051 Switzerland
41-61-274-7474
www.danzas.com

Panalpina Inc.
3505 NW 107th Avenue
Miami, FL 33178 USA
973-683-9000
www.panalpina.com

Frans Maas Network & Logistics Services
Noorderport 15
Venlo, 5900 AZ Netherlands
31-77-3597600
www.fransmaas.com

Menlo Worldwide Logistics (Emery)
275 East Big Beaver Road
Troy, MI 48083 USA
650-596-9600
www.menlolog.com

EGL Inc. (Eagle)
Intercontinental Airport
Houston, TX 77032 USA
800-888-4949
www.eagleusa.com

Expeditors International of Washington Inc.
1015 Third Ave 12th Floor
Seattle, WA 98104 USA
206-674-3400
www.expeditors.com

Schenker Inc.
150 Albany Avenue
Freeport, NY 11520 USA
516-377-3000
www.schenkerusa.com

APL Logistics
1111 Broadway
Oalkand, CA 94607 USA
800-331-4289
Email apllogistics@apl.com
www.apllogistics.com

Source: Armstrong & Associates' "Who's Who in Logistics," 2002 edition