Small freight forwarders doomed for failure?

Global- Top DHL executive predicts that smaller companies in the freight forwarding industry will go bust due to delayed payments or route changes.

Hermann Ude, chief executive of DHL's freight forwarding arm, told Financial Times, "many of these companies will just disappear" as an increasing number of cash-strapped customers struggle to pay for shipments on schedule.

"I now see a big attempt by many companies to prolong their pay terms. For us, if a customer does go bust and we still have to pay the carrier, we would survive. But a smaller company would not," said Ude.

Ude predicts that exporters, besides facing payment delays, would ditch smaller competitors that did not have a sufficient network to divert their goods shipments to the Middle East and other more buoyant consumer markets than the US and Europe.

"Many [smaller companies] rely on one or two trade lanes. If the strategies of their customers change very quickly, as they are now, they cannot adapt." Ude said.

However, industry expert, Julian Keeling, CEO of Consolidators International holds contrasting views to Ude.

"I believe there will be one or two huge failures in the large Multi-national ranks. Furthermore, one of the greatest tools in the small forwarders' arsenal is the ability to quickly respond to changes and tailor their business to meet the customers' new requirements," said Keeling.

Keeling continued, "It is the large forwarder that is saddled with internal rules and regulations that causes great consternation for the customer when that large forwarder cannot move quickly enough to adapt to the new environment," he said.