The setting-up of a one-stop centre, consolidating the relevant authorities, agencies and parties in the freight forwarding industry will streamline operations and prevent backlogs of goods at the ports.
WOU’s School of Business & Administration (SBA) senior lecturer Log. Stella Hoo Yee Hui was speaking on ‘A Glimpse into the Future of the Freight Forwarding Industry’ on 30 October 2021. The virtual event, organised by SBA and the Johor Bahru Regional Centre, was attended by about 30 participants.
The centre will help to improve the management of the continual flow of applications seeking approval because currently different procedures are applied at different ports. “It will help to prevent confusion among the freight forwarders,” she added. She also suggested simplifying procedures at the different ports, e.g. for bonded movement and customs, and to implement digitalisation for smoother payments and transparency, thus curtailing unwarranted charges by a few black sheep in the industry.
Hoo cited seven challenges that freight forwarders face to deliver goods on time to the end customer – commercial documentation and regulatory compliance; international payments; packaging and warehousing; cargo insurance; cargo security and dangerous goods; alternative transport solutions; and costing and quoting.
Stressing commercial documentation and regulatory compliance to be the main challenge, she said shipments will not be released if freight forwarders are unaware of the changes in procedures in other countries. She said different countries have different requirements on the documentation and compliance for certain items.
She remarked that freight forwarders deal with international payments as they handle exports and imports and liaise with companies from different countries. There is hence a risk with unstable currencies.
She highlighted that some imports into Malaysia will require a special label, including for halal certificate or nutrition facts. “All these would require repacking and value-added service in the warehouse to suit the needs of the local market.”
Hoo also mentioned cargo insurance for items often transported through the sea freight and air freight. She said that documentation, paying of duties to release cargo, inspection, and quarantine of dangerous goods/suspicious items, will all add to the transit time, giving freight forwarders a very short time frame to deliver the goods.
She pointed out that there are alternative transport solutions available if the air freight is too costly, such as ground transport or sea freight, but this may take longer.
She said local companies in Malaysia invest heavily on assets like warehouse, equipment and vehicles to provide a comprehensive and total logistics service, by they are prohibited by the authorities from simply increasing the price of delivery. She asserted that freight forwarders must have a strong cash flow since they provide the service in advance and collect payments later.
Hoo said freight forwarding is forecasted to grow due to globalisation and the rise of e-commerce. “The cargo volume is increasing, but freight forwarders have a very short time frame to deliver. We must have data-driven decision making, as well as cloud computing, AI and machine learning to ensure the efficiency and effectiveness of the supply chain.”