Freight forwarding networks and associations have been around for years. They are now a fixture in the supply chain…an intricate player in the wider business of moving freight. The freight forwarding networks are in prime time.  There’s nothing really new about freight forwarding (logistics providers) building “networks”. Loose arrangements between international freight forwarders have been a factor in logistics for decades. In fact, it could be argued the entire China trade of old was built around trusted relationships between various agents that could be construed as a “network”. But these relationships were simply an aspect of business, not an industry. Why now? The last two plus decades have seen an unparalleled rise in freight forwarding networks. The exact reasons for the spike in networks might vary but in polling the opinions of many of the network organizers, a common theme emerges.  In recent decades some forwarders like Panalpina, Kuehne & Nagel, Ceva, Agility and Geodis, grew into mega-forwarders. These forwarders were able to leverage their size into a presence throughout the supply chain. Even as the supply chain became more complex, the mega-forwarders were able to either expand organically or acquire the necessary technology or expertise (nearly all the mega-logistics companies made significant acquisitions of smaller competitors to either build their cargo base or IT). In an industry full of mom & pop shops the shear scale of mega-forwarders tilted the competitive balance. The smaller forwarders couldn’t compete with the array of services, offices and IT platforms of the mega-forwarder. But independent forwarders often have an advantage on their larger corporate brethren, especially in the respect to having close relations with the BCOs and knowing the local turf. This is particularly true when talking about freight moving in countries in Africa, Asia and the Middle East. Size isn’t the most important trait in these relationships.  Leverage Some of the networks are comparatively small in size while others like the WCA Family of Logistics Networks whose founder/CEO David Yokeum pioneered many of the common practices presently used in the network business, have over 5,900 member offices. Other networks like Wolfgang Karau’s Spain/Hong Kong-based WWPC (and associated) networks or Gary Dale Cearley’s Bangkok-based XLP networks cater to niche markets. Nearly every group has taken a model of providing niche services within the network. One difference being some groups expanded from the niche network into larger group groups, while others started as general forwarding networks and added niches. As might be expected the level of services offered varies considerably network-to-network. Some offer very sophisticated menus of products and services, others less so. It’s an industry unlike any other. The primary mission is to enable forwarding members to do what forwarders always do: facilitate international trade. But even with all the advances in communication, establishing rapport with an independent forwarder on the other end of the international transaction isn’t easy.  So if there is one common factor among all the networks, it is conferences to introduce forwarders to one another, essentially putting a face to the name. To do this, most deploy a form of the “one-on-one meeting” which has often been described as “speed dating” for forwarders as they run table to table in their meetings. But the system works and many forwarders say that the way they know their agents is through these meetings and one-on-ones. The purpose is to meet potential agents or partners in the network that can be the other half of the transaction. This process is more than matching just forwarding companies but about matching services. There are some inherent issues with any network model. Choosing whether it is exclusive or non-exclusive, run by the members or by the corporate entity is all part of the flavor of the network. There is much debate on whether large or small, exclusive or non-exclusive networks are the best. Like many things it is often difficult to tell.  A regular running commentary from forwarders at the meetings is: There are too many forwarders in a network, thus your own competitors are also deriving the advantages of the group. However, there is also equal debate over having too few members. Too few network members means there are too few agents to help expand the business. Finally, the power of the group itself as much as the individuals also counts. Being able to address industry wide issues is a major function of groups like the WCA. Collectively, the “freight” controlled and the niche freight specialties-served act as industry wide leverage – the very leverage that the mega-forwarders achieve through scale.  How big and exclusive a network should be or not be is difficult to measure. The forwarder reality is they generally spread themselves through many networks and agents – sometimes because they have historic connections that pre-date memberships and in other cases because spreading themselves helps keep them nimble enough to react to new business.   Many of these forwarders while small in comparison to the mega-global forwarders are often the gatekeepers in their respective countries. Often even the mega-forwarders use the dominant local player that knows the “lay of the land”. It is hard to imagine moving freight in Africa or South America without involving a half-dozen or so “local” companies.  This quality of the forwarding networks makes the annual conference gatherings a UN style event often with 20 or more countries (that get along in various capacities) in attendance. This provides the organizers challenges finding sites to hold meetings without being overly burdened with visa and other complications for their members. The forwarder “network” business is also an innovation driven business. What new services can we offer: the original WWPC expanded into building another network “Cargo Equipment Experts Ltd (CEE) a global network for Equipment Owners such as haulers, crane operators, tug and barge operators, stevedores and export packers, port operators, rail operators, riggers & skidders, surveyors, air cargo handling equipment owners and supporting industry, serving the heavy and outsized cargo industry.” The WCA has backed the building of WIN a global industry portal rivaling those of both the air and ocean service providers.   Even relative newcomers like Richard Overton’s Bangkok-based X2 logistics networks has incorporated sophisticated features in their programs to fill out the service side for their members.  Overton, who is a network industry veteran, also represents another trend in the business: Expansion. The network business is expanding despite the problems inherent to the forwarders themselves – perhaps even because of the troubles. Lower freight rates, higher costs for IT, insurance and other up front expenditures and the basic problems associated with trade across the globe, have pushed forwarders together. Operating solo looks like poor business practice in the current environment and the networks offer an affordable option. Today the networks aren’t just a service for the freight forwarders but an independent industry sector, a fundamental part of the process of moving freight through the supply chain.