Economy 4 Critical Problems that Indian Freight Forwarders Face Today
The Logistics Headlines, New Delhi, 23rd Feb 2017 : With initiatives such as ‘Ease of Doing Business’, ‘Make in India’, ‘Digital India’, ‘Single Window Clearances’ etc- is the Indian freight forwarding sector actually receiving any relief? It is well understood that freight forwarders from the nation have had challenging times before due to many reasons. However, efforts thrown in by private and public unit players have promised inputs for exports and imports, which shall smoothen functioning of freight movements in future.
Despite the progresses in India’s freight forwarding industry of logistics, we cannot fail to notice the major problems that currently plague it. Here is a brief insight into the challenges that every freight forwarder meets in India today.
Inadequate Use of Technology
Many Indian freight forwarding companies spend on latest software solutions in their pursuit to improve operations. Something like web-tracking feature essentially helps these companies to have better visibility for orders and shipment. However, just investing into these systems is not enough, one needs to keep up with the changing intelligence and technology, train staff to operate these tools or analyze it to the best- which is where the problem lies.
Companies already bear the costs for automation, machinery and software that sometimes they do not have enough finances planned to upgrade the workforce involved or fail to put these tools to correct use or complete utilization. Steps must be taken to enhance the training models for IT professionals involved in logistics freight forwarding sector.
Excise Policies and Customs
Differences in excise policies and customs harshly affect both importers and exporters. If this can be improved, then function of freight forwarding agents will ease down. Due to stringent regulations at various stages of cargo movements, time and money are wasted, and greater are the complaints from traders, customers etc. The disintegrated structure of the logistics industry needs to be worked upon
Self-assessment and EDI initiatives must be strengthened to clear any roadblocks. With GST implementation around the corner, problems that Indian freight forwarding agents and companies face will be eliminated to a great extend, and there would be practical policies and tax regime to adhere to.
Lack of Infrastructure
Even in the Union Budget 2017-18, a lot many initiatives were introduced for honing logistics infrastructure. However, it is true that such projects are time-intensive and by the time these are completed, the freight forwarding agents and companies succumb to the deficiency of infrastructure. The major concern is shortage of connectivity to airports, roadways, terminals, freight stations etc.
There is a gap between customers demand and committed delivery time of the cargo. Due to such scenario, there are greater risks to high cargo dwell time, delays, bottlenecks, increased transaction costs, and escalation of other charges. Though steps are being taken to tackle these challenges, the Indian freight forwarders still find it difficult to optimize on infrastructure, especially those from remote parts of the country.
Global Business Scene
India’s export-import trade has taken an impact due to weakened demand in key developed markets such as that of the U.S and Europe. Because of economic challenges and political instability in European Union (aggravated by Brexit), has somehow also affected the logistics front of India. The freight forwarding business has thus become fragile in a way that hardships in emerging markets has slumped the trade.
With global trade dynamics jeopardized, the Indian freight forwarders, at least for a time being, will have to encounter a setback. With positive attitude and grabbing rising demand, such adversaries can be pushed away.
Solutions for Indian Freight Forwarders
Freight forwarding industry in India is vastly affected because of poor infrastructure, but an integrated approach that streamlines the supply chain process in terms of route, customs, and cost shall prove to be effective. Though logistics business is fast growing, adapting to newer technology and transportation networks will ease the operations for cargos and freight forwarding agents involved.
As competition in trade routes increase with fall of freight rates, the bargaining power of the industry with shippers-volume will come to be challenged. Using appropriate balance sheet potency to obtain niche players in vital locations and routes will be crucial objective. Another key factor will be to encourage better understanding of customers; needs and then respond to those with advanced logistics solutions.