Freight Forwarders

3 key considerations to address by freight forwarders and logistics finance teams

Team Infomatics
Jul 11, 2022
freight forwarding software

Freight Forwarders​ - Better known as the ​“True Architects of Transport”​ are generally responsible for the following functions:

  • Customs Brokerage
  • Networking
  • Negotiating
  • Scheduling
  • Inventory Management
  • Documentation

Today, the logistics industry is facing uncertain business challenges in both volumes and margins. Cost control has never drawn as much attention as it is in the past few years. Global slowdown, market corrections, fierce competition and adaptation of digitalisation have increased pressures on traditional forms of freight forwarding. This has compelled the industry to look at innovative methods to boost their Productivity, Efficiency and Profitability

Here are 3 critical questions Freight Forwarders and Logistics Finance teams must find answers to today, to stay on top of business pressures.

1. How can I reduce the Time-to-Quote?

“Time isn’t the main thing. It's the only thing.”- Miles Davis

Nothing more could explain the importance of speed in supply chain. “Ocean Freight Rates” are ever-fluctuating and are frequently negotiated by the Shippers leading to critical time-loss for the Freight Forwarders.

“Ocean Freight Rates” are generally of 2 types:

  • Contractual Rates: These rates are marked-up against the Carrier Buy Rates and quoted to Customers. These Buy rates are usually revised periodically by the Carriers.
  • Spot Rates: These are rates (Buy and Sell) negotiated per shipment

The quotes sent to the shipper don't necessarily convert into a booking in a single "iteration". The tale of negotiations is also well-known! Sales personnel have to battle enormous pressure before closing the deal, which takes a toll on their “ Sales Velocity”. According to studies, only 10% of people feel “in control” of how they spend their time each day.

With the evolution of “Mobile based” technology with consistent availability of “Internet Bandwidth”, mobile Apps have helped Forwarders to reduce “ Time-to-Quote”.

Today, forward-thinking players have freed up bandwidth for their sales to manage and control their time by investing more in one-on-one meetings with more customers and building relationships for future businesses. This is the future “ Sales Velocity” of the organisation.

2. How can I freight forwarding software help logistics finance team?

Freight forwarding software is an essential tool for modern freight forwarders, enabling them to enhance their productivity and profitability while remaining competitive in an ever-changing market. These tools offer innovative solutions to critical business pressures and ensure that freight forwarders can adapt to market changes while maintaining their business growth.

One of the primary advantages of freight forwarding software is the ability to reduce the time-to-quote, a crucial aspect of the supply chain industry. Freight rates are frequently changing, and shippers frequently negotiate these rates, leading to time loss for freight forwarders. With mobile-based technology and internet bandwidth, freight forwarding software has become a vital tool for reducing the time-to-quote. Forward-thinking players are now investing in building relationships for future businesses, helping to increase the sales velocity of the organization.

Another key benefit of freight forwarding software is the ability to increase the productivity of freight management workers. Documentation is a time-consuming and repetitive task that is directly proportional to the workforce's increase. Freight forwarding software allows for automation of repetitive tasks, leaving the workforce to focus on more creative and decision-making roles. With the help of Robotic Process Automation (RPA), a method where software applications replicate rudimentary tasks, "virtual workforce" has emerged, acting as a hybrid engagement between humans and machines. This new technology can result in significant savings of up to 50%, helping to improve a freight forwarder's bottom line.

The logistics cashflow of a freight forwarder can be significantly improved by leveraging freight forwarding software. Cash flow is a measure of a company's strength, and any imbalance between payouts and collections can lead to financial stress. Freight forwarding is a credit-hungry business, and customers demand credit days against the bookings they place. Freight forwarding software can offer real-time visibility of cash flow and generate reports that can provide valuable insights into the business. The software can help freight forwarders manage their finances better, avoid liquidity and margin pressures, and ensure timely collection of funds.

3. How can I Improve my logistics cashflow?

“We were always focused on our profit and loss statement. But cash flow was not a regularly discussed topic. It was as if we were driving along, watching only the speedometer, when in fact we were running out of gas." - Michael Dell, founder and CEO, of Dell Technologies

According to “U.S.Bank” study, 82% of small business fails due to poor management & understanding of Cash Flow.

Cash is King for any organisation and Cash Flow is a measure of its strength for any organisation. Since a Freight Forwarder relies only on Freight margins from their ‘Buy rates' from Shipping Lines and ‘Sell rates’ to the Shippers, the timely cash collection has an impact on the survival and growth of a freight forwarder. Any imbalance between the payout and collection would have an adverse impact on the cash flow leading to financial stress.

“Freight Forwarding” is a credit-hungry business. Customers demand “Credit Days” against the Booking they place. One of the reasons shippers prefer to deal with forwarders is to avail of Credit Periods which they couldn’t have availed from the carriers, directly. This increases 2 important pressure points on Forwarders

Liquidity pressure, where they have to pay the Lines on a stipulated date and on the other hand, have to manage a longer collection period.

Margin pressure, due to extreme competition and over capacitated market

Daily visibility of the "Cash Flow position" would enable Key Stakeholders in the Organisation to make key financial decisions at appropriate times. Cash Flow Budget & Cash Flow projections would enable Key Stakeholders to visualise pitfalls by better handling expenses and avoiding surprises.

Tools enabling automated Daily Bank reconciliation, Daily Cash position, and AI/ML-enabled Future cash flow projections to provide insights to make the right decisions to maintain optimal Cash Flow.

Remember, “Profit is not the same thing as cash”.

Occasionally, companies analyze investments in terms of their effect on revenue. The foremost reason is many young companies focus on hitting certain revenue targets to satisfy their investors. But revenue figures say nothing about profitability, let alone cash flow. True Return on Investment (ROI) analysis has to convert revenue to profit, and profit to cash.


It would be encouraging to know your thoughts on some of the more pertinent questions that today’s Freight Forwarding community are being challenged with. 

We at Infomatics (hyperlink website), have been partners to medium-to-large enterprises in the Asset & non Asset based Logistics business, helping them improve their business efficiencies. 

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