Interview: How UPS leverages scale in freight forwarding

Editor’s Note: Logistics managers have always been under pressure to strike the right distance between specialized intermediaries and the markets they want to serve. That challenge is becoming increasingly complex, however, as mega-brokerage enterprises capture more share.

Michael White, International Marketing Manager at UPS, notes in his exclusive LM interview how the big players differentiate service.

Logstics Management: How do we currently define the freight forwarding function?

Michael White: Transporting products is usually out of scope for many companies who manufacture, store and/or sell goods. The investment required to set up and manage transportation services isn’t usually a part of a businesses’ core objectives. Freight forwarding today is more than just moving products, it is providing full-service logistics support that enables customers to focus on what they do best. A good freight forwarder can take any combination of packages, pallets, containers and ensure they move on-time/on-budget via a combination of rail, road, air and ocean transport that best meets a customer’s time/cost requirements.

LM: What regulatory changes are underway to redefine that function?

White: The rise in global trade is already here and we continue to see a shift in trade with emerging markets. Companies looking to expand to these regions, find that a forwarder can be more useful than having to build out a new department to manage moving products in and out of an unfamiliar region. A forwarder will already know the business climate, regulations, and infrastructure necessary to facilitate trade. When it comes to labor issues, the expertise in price and capacity agreements that forwarders are able to secure add another layer of security.

LM: How is technology changing the marketplace?

White: UPS recently acquired Coyote Logistics which has an industry-leading approach to freight forwarding using innovative technology for organizing full truck load shipments. There is interest from start-ups to develop similar technology for freight forwarding. Technology will be the deciding factor in the success of freight forwarders all over the world. Those who choose to invest and embrace will thrive and those who do not will lack the capacity to provide customers with the visibility and reliability they need.

LM: Do you have any additional observations you would care to discuss?

White: Did you know UPS is an “NVOCC”? As one of the world’s largest integrated and non-vessel operating common carriers (NVOCC), UPS is able to offer customers options that enable them to better manage their unique timing, cargo size and routing needs. In fact, just this past summer, UPS announced a premium LCL service from China to Europe that utilizes rail lines to transport ocean containers. Not only is UPS able to offer unique solutions within the world of air and ocean fright, but our size allows us to negotiate competitive rates and services with the carriers. In other words, working with UPS gives customers options to price and service options that are typically reserved only for the largest shippers.