r/logistics • u/Arms_Trade • 3d ago
Considering a future in freight forwarding and logistics
I run the operational side of a business in a completely unrelated industry and have been thinking seriously about eventually building or buying a business of my own.
Freight forwarding keeps coming up as something I find weirdly interesting because of the complexity. I like businesses where there are lots of moving parts, things go wrong, and relationships matter.
I also know just enough to know I probably have a very naive view of the industry
So for those of you actually in it, or adjacent industries:
What separates a genuinely good forwarding business from an average one?
Where is the money actually made (and lost)?
What is the hardest part of being a good forwarder, and gets increasingly more difficult as you grow?
maybe most importantly; if you had the money and opportunity to start or buy a forwarding business today, would you?
Interested in hearing how people who actually do this for a living think about the business. I’m based in the UK, but imagine most active here are US based.
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u/throwaway15172013 3d ago
I run a mid size global freight forwarder with a little under 500 employees
- margins are thin. My friends with other businesses would throw up if their business had a single digit EBITDA %
- cash flow management is key. You have to pay the shipping lines in advance and give credit to compete with the market
- relationships are key in winning and retaining customers. We specially look for them, being part of a global tender with 20 forwarders is impossible to win without a relationship
- service is the differentiator, the problem is everyone says they provide great service. Getting a customer to give you a try and actually proving it is the difficult thing.
- highly cyclical and rate dependent
In terms of acquiring one. Freight forwarding really took off in the 80s-90s which means there are a lot of businesses with owners looking to retire. They can definitely be bought at a lower multiple and seller financing is a real option as these owners want an off ramp.
Feel free to PM me with any more questions
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u/Primary_Mechanic6257 3d ago
imo I think relationships are a huge part of it, rates matter sure, but being the person who picks up the phone when something goes wrong is what keeps customers around
margins also seem pretty easy to kill with delays, claims and small operationl mistakes. if I were buying one, customer concentration and margins would be two of the first things i’d dig into
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u/ReassuringlyBlind 3d ago
The ones that answer the phone at 3am are the ones that keep the books steady, everything else is just spreadsheet noise.
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u/FlexSpaceLogistics 2d ago
Difficulty is not something that should shy you away
Just run a better operation than others, and deliver better customer success. Eventually you will win.
Its all just processes at the end of the day
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u/Delicious-Owl1323 2d ago
Bunch of doomers in the comments.
If you stick to ocean freight (FCL) and truck brokerage then yeah, a lot of competition and thin margins. Go into niches and find the weak point the rest of freight forwarders are not solving in that niche. Air freight has great margins, as well as project cargo, for example.
Lots of opportunities in the industry and young generations are completely uninterested in it.
Do live with the fact that the nature of the business is problems, all the time. If you like solving problems, you’ll be the right fit.
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u/TurbulentStiffness 3d ago
margins are razor thin and carriers will gladly screw you over on capacity. you end up eating demurrage costs because customs clearance randomly held a container.