Why transparency and trust in international shipping are important now more than ever
Anybody who has been a part of the international shipping industry for any amount of time will tell you that the biggest problems plaguing the industry stem from a lack of transparency. Although this is a problem that has persisted for ages, the fact remains that it is still a key talking point today — Transparency was at the top of the agenda for London International Shipping Week in 2019.
This lack of transparency, undoubtedly, has been the cause of a lot of concern for international shippers, who’ve had to deal with the inefficiency, non-compliance, and uncertainty resulting from it. They face all of its consequences, right from the moment they book their shipment and helplessly agree to ambiguous local charges up to the moment their shipment is delivered days after the latest updated ETA. There is minimal or no transparency regarding costs and timelines, causing significant losses for not just individual shippers but entire supply chains. When there’s no transparency in supply chains, there can’t be any trust among the supply chain partners, either. And as you already know, trust is a critical contributor to supply chain collaboration and performance.
So, while shippers may have been tolerant of the lack of transparency in international shipping, staying tolerant will no longer be sustainable anymore, for the following reasons:
Stricter regulations and enforcement
The international shipping business has always been subjected to heavy regulation, from international maritime laws that govern the activities of shipping carriers to trade laws that differ from country to country and from commodity to commodity. Not following these regulations can lead to damaging consequences such as loss of business and even a loss of reputation. There have been numerous cases in recent months where goods have been held at the ports of importing countries due to the cargo not meeting the requisite standards. There have also been instances of heavy fines paid by importers and exporters for inaccurate or falsified documentation, such as when an importer was fined USD142,000 for allegedly submitting falsified documents.
Such cases will only become more frequent as international regulations become stricter and more complicated. For instance, the International Maritime Organization (IMO) implemented a regulation earlier this year, referred to as IMO2020, for reducing the permitted levels of sulphur emission from carrier ships. This will push carriers to use low-sulphur fuels which are more expensive than the fuels used now. And these added costs will be passed on to you, as an international shipper. If that’s the case, then carriers and forwarders should be more transparent about their freight cost calculations. This is to ensure that any hike in freight costs attributed to IMO2020 is legitimate and does not include any hidden margins for forwarders and other middlemen. Alternatively, it is a good idea for shippers to book freight with forwarders like Freightwalla that always offer the full cost breakdown for every shipment.
Growing need for efficiency
Both businesses and investors are increasingly becoming results-driven following the recent turn of global events. Wallets are shrinking and expenses are being monitored in microscopic detail. Due to these circumstances, every cost leak that can be plugged is being plugged in every business function to maximize efficiency. The same is true for supply chains operations. Businesses need complete visibility into their supply chain operations so that they can better coordinate their operations and maximize efficiency.
However, to gain this visibility, businesses need constant tracking information on their supplies and imports, which is not a feature of international shipping today. Tracking updates, if any, are highly sporadic and inaccurate, which adds to the uncertainty in supply chain operations. This means that supply chains lose their ability to be agile and, therefore, miss out on efficiency-enhancing opportunities.
As businesses and investors become more efficiency-oriented, the lack of transparency of international shipping will end up being a liability. It is, therefore, crucial to make international shipping processes more transparent to prevent them from turning into the weakest links in global supply chains.
Increasing competition and availability of technology
The biggest reason why transparency and trust have become more important than ever is that they have become easier to realize than ever before. While the international freight industry has been slow in adopting digital technology, pioneers like Freightwalla are already injecting some much-needed transparency and trust into international shipping through their digital platform.
With the help of its freight forwarding platform, global network of partners committed to transparency, and a dedicated team of experts, Freightwalla ensures that all stakeholders have complete visibility into shipping operations. As a result, international shippers using their services are able to gain a competitive edge over their peers.
What does this mean for international shippers that haven’t committed to incorporating transparency in their shipping operations yet? This means that they are slowly losing ground to the businesses and supply chains that have already adopted transparency and trust as key drivers of their operations. And if they don’t switch soon, this gap may become too wide to recover from.
