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Choosing the right freight solution

Frans Kok, General Manager, AEB (Asia Pacific) Pte Ltd | Jan. 12, 2015
The right freight management solution for organisations depends on its needs so there is no one-size fits all.


In today's dynamic business environment, freight forwarder tariffs are to supply chain manager just like what mobile phone plans are to rest of us. Not many can understand the different price calculation models with their differing cost factors and service types.

This has led to supply chain managers facing issues of not being transparent or being able to compare prices. It also makes freight cost calculations time-consuming and error-prone. The logistics and supply chain industry needs the right solution to eliminate the vicious cycle of requesting freight quotes, meeting deadlines in day-to-day shipping operations and dealing with the complexities of tariff structure.

However, an effective solution is not easy to find, especially with heightened logistic risks in Asia's complex landscape fuelling more challenges in selecting the right solution. For transport and freight management to be successful, the management of carrier contracts must be too. This refers to the agreement on freight charges negotiated between shippers and transport service providers.

Complex Asian landscape increases risks
In Asia, many logistic providers face the challenge of diverse, complex and volatile supply chains across several countries. Other than the usual risks such as bad weather, security issues, port congestion and equipment failures, Asian logistics providers are also faced with increased labour rates, unstable freight changes, and fluctuating demand. 

For example, China, which has traditionally dominated the production landscape, is experiencing rising wage levels. This has caused global customers to diversify their production to other emerging, less expensive markets such as Vietnam and Indonesia. This leads to longer routes and increased risks and costs for logistic providers.

China, along with other Asian countries, are witnessing low cost manufacturing move from coastal areas to inland provinces. This means that supply chain risks have also increased, with greater distance added to the routes despite insufficient transport. It could also lead to congestion of air routes, higher road tolls for container transport and cost and reliability issues of moving exports.

In light of these trends, the winning logistics providers are the ones that learn how to work with this complexity, and know how to best utilise outsourcing and offshoring as tools to achieve scale and flexibility.

Obstacles to the right solution
Internally, organisations also face challenges in selecting the right freight and transport management software. There are a wide variety of software providers with varying systems. Therefore, it is necessary to thoroughly evaluate all requirements of the organisation while reviewing available options on the market. Organisations should also examine the solution's return-on-investment (ROI) before finding the best solution.

Other than the technical aspects of the software, there are other factors such as user-friendliness, scalability and maintenance. It is also important that support services are available and satisfaction levels of reference customers are present.


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