Dubai is burgeoning and so is the demand for freight forwarders and the challenges they face. Many believe that the Dubai freight forwarders business is a sure bet. However, many of them are unaware of the enormous difficulties they face. A freight forwarding firm does everything ranging from resources and purchasing cargo space to tracking your shipment. Here we explain a brief idea about the top challenges that logistics companies face today:

Global cost spikes

The rising international costs of services are one of the primary concerns of freight forwarding companies in Dubai. Most of the players in the market have raised their prices and the ones that have held on to lower prices have been forced to dilute the quality of their services. Small logistics firms are struggling to survive in this market which is further affected by the fluctuating currency exchange rates.

The physical workforce is a pillar of strength for the company’s growth. However, technological advancements are making life much easier for everyone. As a result, freight forwarders in Dubai are laying off employees. Logistics companies are finding it difficult to expand their operations due to a lack of workforce retention. The most difficult challenge for small businesses with a small workforce is gaining the trust of their customers.

Errors in Long-term Demand Predictions

Demand forecasting is one long time factor that affects pricing. Markets often fail to meet expectations that are formulated from signs of an expanding global economy. This ends up in higher shipping costs.

Sporadic Contingencies

Every freight forwarder in Dubai has encountered unforeseen circumstances like climate change or infrastructural roadblocks leading to rerouting. Only the companies with a wide network and extensive experience can overcome such bottlenecks. Leading freight forwarders in UAE like Globelink West Star Shipping has strategically crafted proactive contingency plans to ensure hassle-free movement of freight.

Circumvent all obstacles by partnering with the best freight services provider

Globelink West Star Shipping LLC, formerly known as West Star Shipping, is widely recognized as the leading Freight Forwarding & Logistics partner in the UAE as well as the entire Middle East region. A group company of CWT Globelink Group based in Singapore has 130 offices in 33 countries with an extensive network of agents worldwide. GLWSS provides comprehensive Freight Forwarding & Logistics solutions for both import and export for Ocean Freight (LCL, FCL, Cross Trade, Break-bulk, RO-RO services), Specialized Logistics services viz., Auto Logistics, Project Logistics, Hospitality Logistics, Exhibition Logistics, Warehousing & Distribution as well as Air Freight import and export services.

The world is progressing at an astonishing rate because to globalization. Globalization connects countries, resulting in increasing trade and product transit around the world. Goods of all kinds are to be delivered to nearly every location on the planet, from landlocked countries to locations on the other side of oceans. It is advantageous to make a smart choice about the mode of freight forwarding that you use. Each industry and nature of shipment requires specific solutions.

Air Freight vs. Sea Freight: Which suits you better?

Shipping maritime freight is a hard operation, yet it is the most cost-effective. Ocean freight is the method of moving products using sea commerce routes. It allows transporters to effortlessly transport products in huge quantities or in bulk.

Ocean freight is one of the most regularly used modes of transportation due to its numerous advantages. Almost 90% of global exports and imports are carried out via sea channels.

Cargo transportation via sea is a bit complicated. Shipments loaded into containers are delivered to the port and customs. Following clearance, the cargo is loaded onto the vessel while keeping its size in mind in relation to the shipment size. Following the completion of the journey, the products go through the customs authorities at the final destination. Typically, an agent arranges the payment of taxes and duties on the product and gets it released for delivery in the destination.

One of the most major advantages of ocean shipping is safety. The ship’s architecture allows for the safe and secure transportation of hazardous or dangerous commodities.

Air freight ensures quick transit of cargo from one location to another by air routes by an air carrier—this usage of the medium usually defines when the delivery is made swiftly.

Airfreight employs the same routes as passenger and commercial planes, which is why it is regarded the greatest option for rapid transportation. It is the most expensive mode of transportation since it is the quickest.

The shipment is subjected to stringent security checks by air freight companies. Since security screens, air terminals, air transportation, and burglary are all dangerous, the threat has significantly decreased.

Reliable security, along with possibly the most secure way, means that each client receives safe delivery. Furthermore, because of faster deliveries, mishandling and other product damage are reduced.

When comparing these modes of freight forwarding, we have to consider multiple factors and be clear about our priorities.

Air delivery costs more than other modes of transportation since it is faster and more efficient. Whereas ocean freight provides outstanding cost-effective methods for carriers to carry goods from one location to another. It would be ideal to choose ocean freight for bulkier loads that do not have a critical delivery time schedule.

The urgency of your shipment is another important factor to appraise when picking between airship cargo and sea cargo, as the key difference between ocean cargo and airship cargo is pace of delivery. Air freight is the perfect choice if time ranks above cost in your priority list. Air freight solutions also have lower warehousing necessities because customs clearance of airship cargo is swift and air transporters will have smaller stocks in general.

Ultimately both modes of freight forwarding have associated advantages and disadvantages. The option is determined by the customers’ demands and requirements. Another important factor is to choose a trustable partner to meet your air freight or ocean freight needs. Most of the leading logistic providers offer tailormade intermodal freight forwarding solutions that will satisfy your requirements.

Global trade is dependent on the movement of goods from A to B and in today’s trade, more than 800+ million containers criss-cross the globe carrying various cargoes. Containers move by road or rail before it gets to the port for the sea movement. During transit, there are several forces acting on the cargo due to the movement of the truck or train including:

• Gravitational force
• Frictional force
• Random Deceleration
• Random Acceleration
• Centrifugal force
• Vibratory force
• Longitudinal and horizontal forces
• Transverse horizontal forces

These forces can have an impact on the container and the cargo inside the container, especially if the cargo has not been packed properly and it shifts inside the container during transportation.

The movement that happens to a container is worse when it is at sea as unlike road or rail movement, there are a few additional ways in which your cargo moves inside the container while at sea.

Any movement of cargo inside the container can cause cargo damage and as per claim statistics, cargo damage is the leading cause of cargo claims.

Apart from loss or damage of cargo in transit, risks due to loss or damage of cargo may also be attributable to

• Cargo theft
• Fire or explosion
• Ship grounding or sinking
• Overturning or derailment of land transport
• Collision or accidents at sea or on land
• Ship discharges cargo at another port due to distress
• General average sacrifice
• Jettison
• Water ingress
• Containers falling overboard
• Loading/offloading accidents

When such loss or damage happens, the normal recourse available to the BCO (Beneficial Cargo Owner – could be a direct exporter, direct importer, seller, or buyer) is to claim for the loss from the insurance companies who have insured the cargo.

Cargo insurance is a type of insurance that compensates the insured against loss or damage to cargo depending on the type of cover taken.

However, in many cases, insurance is considered a grudge purchase. Something no one wants to pay for unless they must and because they have a misguided view that they need not insure their cargo.

This approach is totally incorrect. As the name suggests, the BCO is the owner of the cargo, and therefore it is in their best interest to safeguard their cargo and cover themselves sufficiently for such exigencies.

No one can predict when and how cargo damage can happen and if you, as a BCO have not insured your cargo then you could end up losing your money and cargo in case of any damage or loss.

As a case in point, you can look at the many incidents that have happened recently in shipping where containers have fallen overboard while at sea, ships catching on fire, and ships running aground. No one anticipated these disasters.

This is besides the regular issues of cargo theft, pilferage, seal breakage, and road accidents.

Responsibility

Much BCOs work under the impression that once they hand over their cargo to a carrier or freight forwarder, they will cover/insure their cargo while it is under their possession.

While the carrier or freight forwarder has their own insurance covers, it does not cover the cargo or the value of the cargo.

Their insurance cover is to cover their “liability” while the cargo is under their possession.

Carriers are covered by their P&I club covers, whereas Freight Forwarders will have Liability insurance covers.

The bill of lading terms and conditions clearly indicates the conventions that cover the contract of carriage and the bill of lading. Even if the carrier is legally liable, their liability is limited and the liability varies based on the convention used.

In most cases, this liability amount will be much lower than the value of the cargo. The limit of this liability is mentioned on Page 1 of the bill of lading which has all the terms and conditions associated with the carriage of the cargo.

BCOs must not assume that nothing will happen to their cargo or that the Carrier or Freight Forwarders are responsible to insure the cargo.

The logic is simple, the cargo is owned by the BCO and they must insure it.

Types of Insurance

It is also equally important for the BCO to ensure that they are sufficiently covered as there are several types of insurance covers in the market and not all might suit their requirements.

There are different types of cargo insurance available but the most common or comprehensive Institute cargo clauses – A, B, and C which cover different aspects of cargo in transit.

These clauses specify which items in the cargo mix are covered in case of any loss or damage to the shipment and the extent of the coverage is directly proportionate to the insurance premium.

• Institute Cargo Clause C has the lowest premium and consequently offers the most restrictive coverage.
• Institute Cargo Clause B is a bit more expensive than C, but the coverage is higher than C. The policyholder may cover some of the valuable items or part of the cargo.
• Institute Cargo Clause A offers the widest coverage – said to be “All Risks” but at a higher premium.

C Clauses – Risks covered

1. loss of or damage to the subject-matter insured reasonably attributable to
2. fire or explosion
3. vessel or craft being stranded grounded sunk or capsized
4. overturning or derailment of land conveyance
5. collision or contact of vessel craft or conveyance with any external object other than water
6. discharge of cargo at a port of distress
7. loss of or damage to the subject-matter insured caused by
8. general average sacrifice
9. jettison

B Clauses – Risks covered

1. All the above plus:
   • loss of or damage to the subject-matter insured caused by
   • general average sacrifice
   • jettison or washing overboard
   • the entry of sea lake or river water into vessel craft hold conveyance container or place of storage
2. total loss of any package lost overboard or dropped whilst loading on to, or unloading from, vessel or craft.

A Clauses – Risks covered

This clause covers all risks of loss of or damage to the subject-matter insured except as provided in Clauses 4, 5, 6, and 7.

All the clauses cover General Average plus “Both To Blame” collisions in the case where containers are lost at sea due to the collision of two ships.

Conclusion

41 ships were lost worldwide in 2019 in maritime disasters/incidents with high levels of trade, busy shipping lanes, older ships, and bad weather said to be the major factors for these losses.

In the recent past several big ships have lost containers and/or caught on fire – Maersk Honam, Yantian Express, ONE Apus, Maersk Essen, Ever Liberal, and a few others.

In all these cases, there would have definitely been some shippers who did not consider insuring their cargo and are now facing consequential losses.

Do not be that BCO – insure your cargo for your own peace of mind.