A freight forwarder is liable for dealing with freight rates, tracking containers, managing customs documentation, and consolidating shipments, amongst other responsibilities. Importing goods from different countries and shipping them to those same countries can offer profitable business opportunities for companies who have the aid to put strategic logistics ideals into action.
1. Perform Industry Analysis
The most critical step to understanding how a freight forwarding business works is through industry analysis, which provides great insights. You need to perform research on the market and become familiar with its operating dynamics. You need to research your rivals on a global scale to gain an understanding of how they have achieved their degree of success and how you can replicate their strategies to achieve your own goals. You are required to have an in-depth understanding of customs norms and processes, which can differ from country to country and even port to port.
Working for a freight forwarding company at the beginning of a career in the logistics industry is highly recommended, as this provides the finest opportunity to acquire relevant experience. Working with an experienced team will help you build the skill sets that you’ll eventually require to start your freight forwarding company.
2. Obtain Licenses and Insurance
Getting the appropriate licensing in each of the countries where you’ll be doing business should be the next step in setting up a freight forwarding company. It is because freight companies frequently engage with a diverse spectrum of geographical locations and shipping techniques. For any shipping and transportation method you wish to provide, licenses are required. To safeguard your company if cargo is harmed or lost in transit, you must also obtain liability insurance in addition to licensing. If you send cargo abroad, you should also think about marine insurance, which is intended exclusively for overseas exports.
3. Analyze Your Costs
You need a reliable team, easy-to-use software, and industry expertise to get started. To monitor your entire accounting and invoicing workload, a computer is required. Apart from the licensing and insurance costs, you will also need to invest in worker’s compensation insurance and disability insurance in case an employee is injured on the job.
You must compare your expenses to your anticipated profits. To decide which services to offer and what your competitors are charging for those services, you must study the key performance indicators of your firm, such as your gross profit and ebitda. Freight brokers typically bill their clients for services at a 20% rate. They charge the customers only when the goods have been securely transported and within the committed time.
4. Develop Strategic Plan
The next step is to develop a solid strategic plan for your forwarding business. Having a well-thought-out plan will help you save time and money.
First, you must create a mission statement that clearly shows where you ultimately aim to be. Next, you must run a SWOT analysis of your freight forwarding business that showcases each aspect of your business, helping to grab the right opportunity and focus on it better. After SWOT analysis, you must define your short-term and long-term business goals to track your business growth. Next, you must clearly define the key performance indicators (KPIs) that will show the progress of your business. Constantly measure these indicators to have concrete evidence of the business growth happening.
5. Build Strong Network
Proper networking and connections are crucial for any business, including freight forwarding, because a bigger and better network equals excellent growth opportunities. You must think about long-term growth with a connection, and build trust for future business opportunities. In the present era, where social media has become an indispensable part of most people’s lives, you can grow your network there and connect with people from around the world. It’s so possible that an acquaintance of yours is in control of a freight forwarding company or has tie-ups with a diverse range of clients. Even your next-door neighbor could possess decades of experience in this industry with valuable insights and contacts. Thanks to strong networking, you can access all these elements and improve your business growth by notches.
A solid sales and marketing department must be established if you want to grow your freight forwarding company. You can start with market research to get well-versed with information that provides insights into customers’ business and their supply chain. You can make sales forecasts and closely analyze market trends and what your competition is upto. Promoting your freight forwarding services to everyone can be very costly, so it’s important to target the right audience. Segmenting your potential customers helps you channel and make your marketing efforts more accurate.
A well-planned marketing campaign will connect with the customer rather than just promoting the business or its services. Finally, set your goals and budget so you don’t exceed your spending capacity and nurture your customers, making them loyal for repeat business.