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The impacts of COVID-19 have been far-reaching, and the freight forwarding industry has not gone unscathed. Pressure on forwarders has been increasing over the past months, with many smaller logistics companies seriously weakened due to the financial stresses. Some, larger, more robust freight forwarders are considering consolidation tactics, picking up smaller forwarding companies that are facing bankruptcy, hence demonstrating the volatility of the situation.

Aside from the tremendous loss of human life, the virus seriously compromised social networks, and the global economy took an enormous hit. The Chinese manufacturing industry was practically at a standstill, and container ports all but ground to a halt. Considering that 80% of the world’s trade goods are shipped by sea, it’s no surprise that sea freight rates tanked. Freight forwarders have been forced to capitalise on diversification of services such as consolidation and 3PL services in a bid to maintain buoyancy. Some big gun freight forwarders are also applying unsavoury business tactics, using lines of credit as bait for desperate clients, and small to medium-sized companies find it difficult to compete.

The practice of doing business based on how much line of credit is given puts forwarders at risk to suffer multiple defaults from companies who don’t survive the lockdown. The risky nature of the ‘line of credit’ is a cargo payment method that is employed worldwide. The freight forwarding industry is complex and highly regulated and is now experiencing restrictions as we’ve never seen before, and it’s forcing some businesses to act mercilessly to survive. The line of credit is a very competitive business practice that adds incredible pressure to an industry that is already baulking under the financial weight of COVID19. The terms on which credit is established can be a cut-throat business and are diminishing service levels across the industry. Given that freight forwarders, logistics providers and transportation companies are now considered to be ESSENTIAL SERVICES, a loss of professionalism seems counterproductive to business success.

Money Makes the World Go Round But Integrity Oils the Engine

For a global logistics company, like Avion International Freight Forwarders, whose well-established business practices focus on integrity, it’s business as usual. Our clients know they can rely on us to conduct business honestly and that our clients come first. Avion International Freight Forwarders will endure the crisis due to professional excellence where others are only surviving because of the amount of turnover they are doing.

Contact us today on +61 2 9326 8400 to discuss your needs.