Freight Transportation Risks and How to Mitigate Them

Serving as a specialised and well-connected intermediary between suppliers and carriers, freight forwarders are the linchpin of global trade; enhancing value along the supply chain by simplifying the secure and efficient transport of goods to their final destination. However, freight forwarders must take proactive steps to ensure optimal performance with so many moving parts, unpredictable variables, and external pressures like market saturation, climate change, and geopolitical tensions. 

Identify and Assess Risks 

Freight forwarders are more than a specialised transport service; they have evolved from covering only cargo movement, customs clearance, and documentation to personalised customer support, from user-friendly digital platforms and real-time tracking updates to expedited shipping and catering to more unique cargo types. The first step in managing risks is identifying, assessing, and estimating potential threats. It’s no secret that freight forwarding operations, from supply chain management, customs document compilation, and physical inspections to export haulage, main carriage, and final delivery at the designated import destination, are riddled with various risks. Whether supply chain disruptions are caused by unreliable carriers, lost or damaged goods due to improper packaging, failure to comply with changing regulations and customer expectations, or currency exchange fluctuations, these logistics experts must evaluate the impact of each identified risk and develop a comprehensive action plan. 

Customise a Risk Mitigation Strategy 

After identifying common liabilities from past incidents, industry news, and expert opinions, freight forwarders should assess the likelihood and impact of each risk. For example, minor shipment delays due to weather or port terminal issues are more frequent but less severe than major risks like cargo damage or theft. Once these high-risk areas are clearly identified, the information should form the foundation of a risk management plan. This plan should include clear objectives, assign specific roles, involve key stakeholders, and implement effective technologies and protocols for ongoing risk monitoring and mitigation.

Harness New-Age Technology

Utilising advanced technologies is an essential component of anticipating and preventing threats and inefficiencies, from Electronic Chart Display and Information Systems and Position Detection Systems that enable the safe navigation and real-time tracking of cargo, boosting operational visibility and transparency, to avant-garde surveillance and intrusion detection systems that can detect dangers and respond to crises with data-driven dexterity. Big data analysis is crucial to a comprehensive risk management strategy as it facilitates access to real-time data and ad-hoc reports for informed decision-making, connects stakeholders to a single source of truth, and enhances resource optimisation by forecasting demand, reducing manual errors, and improving overall performance. If you’re looking for reputed marine companies in Sri Lanka that implement cutting-edge solutions, venture no further than the likes of McLarens Sri Lanka.

Prioritise Stakeholder Relationships 

According to NTT Data, 78% of logistical professionals cite improved communications as essential in building strong relationships with carriers and clients, making it imperative to establish AI-powered asynchronous communication links that overcome geographical and language barriers and differences in time zones. From establishing feedback loops for every stage in the logistics process to knowledge-sharing platforms that can identify solutions for specific challenges without delay, clear lines of communication between internal teams and external partners are vital to ensure performance-focused cohesiveness in this complex ecosystem. Implementing innovative digital tools like blockchain technology is imperative to tackling dynamic market shifts, geopolitical tensions, and shifting industry regulations with the power of stakeholder synergies. 

Review and Upgrade 

It’s important not to rely entirely on your risk management plan and to keep evolving with emerging opportunities and challenges. Stay ahead of the game by constantly reviewing the effectiveness of your strategies and ensuring that you have backup plans in place for just-in-case scenarios, from mapping out alternate routes to working with multiple carriers.