Navigating a Sustainable, Digitalized, and Resilient Future: The Role of Freight Forwarders

Moving cargo around the world is a carbon-intensive business. The logistics and transportation sector contributes just over a third of the world’s carbon emissions. And freight shoulders some of the burden; moving freight accounts for nearly 8% of global greenhouse gas emissions – when combined with warehousing operations, this figure inflates to 11%, according to the MIT Supply Chains Initiative.

While these numbers may seem daunting, they also reveal an opportunity for the logistics and transport sector to become a driving force in the transition to a decarbonized future. Within the supply chain ecosystem, freight forwarders will increasingly play a pivotal role in driving sustainability, digitalization, and resilience across the industry.

Freight Forwarding: The Crucial Link in Global Trade

Freight forwarders serve as the linchpin in global trade and logistics. They streamline and simplify the shipping process for their customers, particularly for international shipments, which involve navigating complex regulatory landscapes, dealing with various carriers, and coordinating multiple stages of transportation.

Freight forwarding involves a series of intricate steps that, if not managed properly, can lead to significant delays and added costs. This ranges from optimizing shipments for the most cost-effective routes and methods of transport, to navigating import/export regulations and customs. Established freight forwarders have vast networks of contacts – e.g., shipping lines, air carriers, trucking companies, etc. – and many forwarders offer warehousing services, providing an end-to-end solution.

Sustainability: A Driving Force for Change

Freight forwarders are under immense pressure to improve sustainability and reduce their carbon footprint. Supply Chain Dive surveyed nearly 160 leaders from across the supply chain, operations and IT sectors to discover that “the No. 1 strategy for supporting ESG goals is optimizing supply chains to achieve goals such as reducing transportation distances, consolidating shipments and optimizing inventory levels.”

To help reduce transportation costs and emissions, freight forwarders are increasingly turning to energy-efficient methods of transportation such as electric trucks and vehicles powered by alternative fuels such as natural gas or hydrogen. 

Forwarders are also using multimodal transportation – e.g., trains, trucks, and ships – in a coordinated manner to allow for more efficient and cost-effective movement of goods.

For example, rail transport is often more energy-efficient than road transport for long-distance freight movements over land, while sea freight is more energy efficient for long-distance international shipping.

Digitalization: Transforming Freight Forwarding

Digitalization is transforming the way freight forwarders operate, offering numerous opportunities to enhance sustainability and reduce costs. Digital platforms can consolidate shipments more effectively, and digital warehouse management systems can optimize warehouse operations, helping to lower energy consumption and emissions.

Advanced logistics software and route optimization software analyze data in real-time to identify the most efficient routes for transportation. Predictive analytics can anticipate potential disruptions, allowing forwarders to adjust routes and schedules on the fly to minimize disruptions.

Blockchain technology is being explored for its potential to document transactions, enhance transparency, optimize routes, and predict disruptions. E-commerce integration and cloud-based systems are also becoming more important by seamlessly integrating with freight forwarding operations to ensure faster and more efficient order fulfillment.

Resilience: Preparing for the Unpredictable

Recent disruptions such as the COVID-19 pandemic, Suez Canal blockage and water level issues in the Panama Canal underscore the importance of resilience in supply chains. Freight forwarders are making strategic investments in resilience to improve sustainability and reliability. This includes diversifying their supply chains; by reducing reliance on a single supplier or region, forwarders can minimize the risk of supply interruptions, ensuring continuity of operations.

"Freight forwarders serve as the linchpin in global trade and logistics."

Forwarders are also developing comprehensive risk management strategies; by proactively analyzing potential risks, forwarders can identify vulnerabilities and minimize their impact on operations. Data analytics and forecasting tools enable forwarders to make informed decisions about inventory levels, transportation routes, and supplier reliability, and predict potential disruptions.

Reducing touchpoints throughout the supply chain also helps minimize the risk of errors, delays, and miscommunications that can occur when dealing with multiple service providers. Consolidating supply chain management with a single end-to-end partner allows for better risk management and resilience.

In fact, 28% of respondents to the Supply Chain Dive survey said they are considering consolidating suppliers to streamline their operations. As supply chains become increasingly complex and interconnected, the ability to provide end-to-end solutions becomes a key differentiator.

Conclusion: Embracing the Future

As the world becomes more interconnected and complex, the freight forwarding industry is at the forefront of change. Sustainability, digitalization, and resilience are not merely buzzwords but the guiding principles shaping the future of logistics.

Freight forwarders are stepping up to the challenge, playing a pivotal role in reducing emissions, optimizing operations, and fortifying supply chains against disruptions. In doing so, they are not only advancing the industry's present but also laying a robust foundation for its future. As we navigate the path to a decarbonized, digitalized, and resilient logistics sector, freight forwarders will continue to be key drivers of change.