Forwarder networks are finally developing better relationships with carriers – an initiative which will likely bring more savings and revenues to both parties.
Smaller forwarders have long suffered from a lack of attention from carriers, but now they have grouped themselves into networks and are making their collective voices heard. Ignorance of the value of these networks is no excuse to pass up opportunities, say SMEs.
Global Logistics Network (GLN), an alliance of 421 small and medium-sized forwarders in 125 companies, has today announced it has signed an MoU with IAG Cargo to assist the carrier and forwarders in working together.
Carriers have certainly failed in the past to grab these chances. Last year, The Loadstar attended the WCA Family’s conference and exhibition in Bangkok. Busy, big and bustling, it was notable for many reasons – but perhaps what was most evident was the lack of carriers attending.
Yet air cargo carriers often bemoan the lack of contact they have with forwarders – but here, where some 1,500 forwarders swarmed through Bangkok – just Etihad and home carrier Thai Airways seemed interested in forming a relationship with the little guys. En masse, of course, they can actually count themselves one of the big guys. Yet from shipping lines to airlines, carriers seem to ignore the benefits of forwarding alliances – and certainly don’t court them in the way they do the big multinationals. During a period when volumes are so low, it seems an odd, short-sighted omission.
Etihad was one that clearly recognised the importance of such networks – following an initial agreement with GLN, in September last year it signed a deal with the WCA Family to allow the members to access Etihad’s services, using a collective air waybill and easing the problems of credit for the smaller companies.
Roy Stapleton, president of GLN, told The Loadstar that working with closely carriers has long been a GLN strategy. It has had a ‘preferred carrier programme’ in place for the past five years – and the relationships are gaining strength.
“GLN’s preferred carrier programme MoUs are the first step to a closer working relationship between GLN members and the participating carrier,” he said. “Currently we have MoUs with Etihad, Qantas and now IAG – and we will be announcing two more in the coming week – one with a top 15 airline, and one with a smaller carrier with tremendous growth in their future plans.”
Smaller forwarders can be at a disadvantage to their multinational cousins when it comes to rates and space. Without the sizeable global volumes, and with a requirement to have sufficient credit, they can lack negotiating power. But together they are able to wield greater clout – something carriers are beginning to recognise.
“We’re happy that airlines are now coming to us to look at providing solutions for our members,” said WCA communications director Dan March. “Airlines should really be selling to forwarders, but they have lacked the manpower to contact so many independents, so generally they have largely ignored them. Now, some are realising that there is a way of creating relationships through the networks.”
He added that shipping lines, which tend to deal more directly with the shippers, have good relations with the networks but contact with forwarder groups is less critical.
Both parties are likely to realise savings and revenue opportunities. Mr Stapleton said that as GLN’s relations with carriers mature, they could find better deals.
“GLN hopes that its members may be able to gain keener pricing as the relationship develops.” And, he added, the benefits for airlines are clear.
“Airlines can get ‘one-stop’ exposure with more than 400 global freight forwarders – and they get open invitations to our annual conferences. Last month in Bangkok we had Thai, IAG, Cathay Pacific, Etihad, Air Asia, Oman Airways, Emirates and Zim Israeli Shipping Line attend.”
Mr Stapleton agreed that in the past few carriers wanted to promote these partnerships. “Having worked for a major airline I believe that such MoUs are a simple and effective way to get more exposure, with little investment. GLN has the vision for such relationships but many carriers seem to shy away from such a process, which to some extent is ignorance of what networks like GLN can bring to the table.”
When its collective network is combined, WCA Family places itself in the top five forwarders compared to the multinationals, while GLN says it is on the top 10, with total annual sales revenues of some $8.7bn.
“Ignorance is no answer for potential business opportunities and SMEs should be recognised as they control substantial business opportunities. That is why IAG had the vision to enter a MoU with GLN.”
IAG Cargo was not available for comment at short notice, but in a statement David Shepherd, global head of sales, said: “A key part of IAG Cargo’s strategy is to engage better with small- to medium-sized customers. We are doing many things to ensure this happens, from refreshing our customer loyalty programme to presenting innovative products that help increase businesses with this important customer base. Today’s MoU represents another channel for us to grow in this market, by engaging with the most important networks of freight forwarders around the world.”