From the devastating impact of Covid-19 to volatile freight rates and growing fears of cyber attacks, 2020 was one of the wildest rides ever. As an integral part of value chains, both within and across borders, the freight forwarding industry continues to face heightened uncertainty while tasked with keeping disruption and delay in the supply chain to a minimum.According to the International Finance Corporation (IFC), part of the World Bank Group, Covid-19 has impacted competitiveness, economic growth and job creation across the logistics sectors.Container volumes plummeted, impacting ocean, land and air transport. The economic recession caused by the pandemic will be the second demand shock.“The full effect of the pandemic on global supply chains is not yet known,” reads an IFC report.Gita Gopinath, economist for the International Monetary Fund (IMF), predicts a long, uneven and uncertain ascent for the world, and while the global economy has been coming back from the depths of its collapse in the first half of 2020, the crisis is far from over.Locally, the forwarding industry has fought hard to remain viable amidst the sharp economic downturn. Smaller players in particular have been hit hard.Mike Walwyn, operational director at Nexlog and a consultant to the South African Association of Freight Forwarders (Saaff ), says there have been casualties.“Forwarding businesses were hit hard and there has been a general decline in profitability. There have been business losses and the industry is under severe pressure.”But, he says, forwarders have also risen to the challenges and adapted quickly, pulling out all the stops to keep their businesses viable.Experience and expertise continue to play an integral role – now possibly even more than ever before, says Walwyn. While governments around the world have responded to the ongoing pandemic crisis by designating most ports, shipping and trucking services as essential – and therefore exempt from lockdown measures – surviving this crisis will require logistics companies to be agile and adaptable.“The industry is facing several challenges,” says Walwyn. “We are seeing more encroachment into our field than ever before. Shipping lines are increasingly entering the field of clearing and forwarding as they consolidate and purchase their own logistics companies.”This all in a world where consumer demand continues to drop, currencies are f luctuating, and all-round uncertainty prevails.“In South Africa clearing and forwarding agents are really bankers. It is how the industry has evolved locally and that puts added pressure on businesses. Agents lend money to clients by giving them credit, and pay VAT directly to government on their behalf,” explains Walwyn. “We then recover that money from our clients. This means that agents and forwarders carry huge financial risk. Even more so at a time when the economy is under pressure and we are facing an economic downturn. The question now is whether we can continue to provide credit as we have done before and is it not too much of a risk?”
