Making Money in Forwarding

Henrik Holm

Description

Making Money in Forwarding provides a road map for how to be a successful forwarder, and make a great career in forwarding and logistics. It covers all aspects of what a freight planner must know, and do, in order to be successful. Readers will learn how to avoid common industry pitfalls and how to focus on profit, cost control, negotiation skills and building customer rapport. The book also shows just how profitable a company in this somewhat unglamorous industry can be, if it is led the right way, thus creating potential for enormous amounts of wealth for investors and employees alike.Written by two industry insiders; having a unique mix of hands-on daily practical experience, and the perspective from the Chief Executive Office, they share all of their insights in a way that concepts and actions can easily be applied and taken advantage of.

Sujets

• Gestion et management

Informations

• Publié par: Troubador Publishing Ltd
• Date de parution: 28 janvier 2021
• Nombre de lectures: 5
• EAN13: 9781800468856
• Langue: English
• Poids de l'ouvrage: 5 Mo

Extrait

Copyright © 2021 Henrik Holm & Lars Henningsson

The moral right of the author has been asserted.


Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms of licences issued by the Copyright Licensing Agency. Enquiries concerning reproduction outside those terms should be sent to the publishers.


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ISBN 978 1800468 856

British Library Cataloguing in Publication Data.
A catalogue record for this book is available from the British Library.


Matador is an imprint of Troubador Publishing Ltd
Contents
Introduction

1.
The European Freight Market
2.
Business Models
3.
The Legal Framework
4.
Manage the Suppliers
5.
Controlling the Costs: Holding a Tight Purse
6.
Raising Prices
7.
Pricing Discipline, Fees, Contracts
8.
Load Planning and Routing
9.
Transit Time Calculation
10.
Keep the Customers
11.
The Forwarding Process
12.
Cash Is King in Forwarding
13.
Environmental Aspects and CSR
14.
Winning Tenders
15.
Monitor Pipeline, Implement New Business
16.
Relentless Management Profit Focus

Summary
Select Bibliography and Tips for Further Reading
Notes
Introduction
The objective of this book is to help make you a very successful forwarder. Some people say you’ve either got it or you do not. That is just too black and white. While it helps if you have some passion for transports and logistics, know a bit of mathematics, and can see things in 3 dimensions, we can all learn and improve in so many ways.
Forwarding is about planning, but also about being active in the market, to price and to sell. It is about finding creative transport solutions that others do not see, to start up new clients, respond to client demands and start new round-trip traffics. It is about negotiation with suppliers, and not least about making the right decisions, often with limited information.
This book gives you a roadmap to success. And much of the insights come from studying some of the most successful actors in this industry. All of them are now very wealthy men, and almost all started at the rather Spartan forwarding desk, not so long ago. And quite a few of them have been our students and reports.
Making Money in Forwarding is focused on road transport that is perhaps the most complex transport mode; however, many of the learnings in this book can be equally applied to other modes like air, sea and rail.
Key areas
This book covers the 15 key areas that we think the successful forwarder should master:
• Freight market characteristics: fierce competitive pressures
• Business model: the best set-up for a forwarding business
• Legal framework: what are the rules of the game
• Manage suppliers: why managing suppliers is critical for the result
• Keep a tight purse: the importance of cost control
• Raise prices: why raising prices is key in a low-margin business
• Pricing and fees: the importance of pricing discipline and fees
• Plan the trucks: the secrets of successful planning
• The forwarding process: what needs to go right and why
• Cash is king: cash flow is key to keep independence and invest
• Keep your clients: deliver on the basics, or clients will leave
• Environment and CSR: why clients care
• Winning tenders: you need to be good at tenders to grow
• Monitor the pipeline: be prepared to implement new contracts
• Management: unashamed relentless profit focus makes the difference
1.
The European Freight Market
1.1. Contribution to the Overall Economy
Freight and transportation is one of Europe’s major industries. Freight forwarding is a significant part of this, and it is also an industry where many European companies are prominent in a global context. Overall, the transport industry directly employs around 10 million people and accounts for about 5% of the gross domestic product (GDP) in the EU. On a global scale the wider logistics industry has been estimated to have revenues of a mind-blowing US $4.6 trillion.
1.2 The Market Size and Growth Rate
The European road freight transport market has been estimated to 355bn euro in 2019. That is a huge pile of money, and the main purpose of this book is to prepare you for grabbing a nice chunk of it.



This is not exactly a fast-growing industry, basically reflecting the relatively sluggish European overall economic growth. The correlation between GDP growth and the freight market growth is strong, and even more so the correlation with manufacturing output.
International freight grows faster than domestic, mainly reflecting 2 of the EU’s 4 freedoms: free flow of goods and capital between the member countries. There is, therefore, much more inter-European trade today, compared to just a couple of decades ago, as remote corners of Europe get integrated into the wider world economy. Much contributing to the increased trade has been the relocation of labour-intensive manufacturing industries to lower-cost sites, for example in Slovakia, the Czech Republic, Romania, Hungary and Poland. This trend of course favours the largest players that can manage the complexities of the inbound logistics to just-in-time facilities as well as time-critical deliveries all over Europe.



The more dynamic part of the market is international traffics, where growth some years has been quite spectacular, also in real terms. There are big differences between countries, with some of the more focused East and Central European countries having much higher growth than, for example, France and the Netherlands.
Transport Intelligence has the international road freight market at just above 100bn euro.
1.3 An Industry That Is Still Consolidating
Based on industry data and estimates, the major forwarders only sit on about 10% of the total freight market. Some client companies still have their own trucks for distribution, and there are more than half a million hauliers and quite a few niche forwarders with ambition to grow. As the entry barriers are very low, this is likely to continue being a fragmented industry. That said, client demands for equal service across the globe, rapid e-commerce growth, increased demand for part-loads, benefits of scale and one-stop shopping, together with the enormous competitive pressure on profitability, are driving industry consolidation – a process that is far from complete.
The below picture illustrates how a small part of the total freight market has been grabbed by the 10 largest forwarders.



Even if expanding the list to include the top-20 players, these companies together cover less than 13% of the total freight market. No other industry comes to mind where the market concentration is so low. Sure, some types of freight may not be suitable for forwarding, and there could be some double counting, but even when eliminating these, the market remains fragmented.
1.4 Top European Forwarders
The European industry leader is DB Schenker, mainly due to its dominance in Germany. DHL is the second largest player, closely followed by FedEx/TNT, DSV and DACHSER.
As the forwarding companies have a bit of a different organisational set-up, the numbers may not be 100% comparable, but Transport Intelligence is the most well-informed source available, hence why we have used their numbers here.



Behind the top 10, few, if any, have truly pan-European coverage.
1.5 Growth
One should not draw too strong conclusions from just one year, so the below chart is more like a snapshot, but K+N is in a clear growth trend, and XPO is not far behind. Likewise, Dachser has for years had a good turnover development.



The dotted line indicates the nominal growth in international transport. Only 2 of the top-10 industry players are ahead.
DSV Road and DHL appear to be the growth laggards.
1.6 Profitability
As mentioned above, the top industry players are difficult to compare, as they have different organisational set-ups, and some of the privately held ones do not publish profitabili