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Targeting the middle ground

More and more airlines are seeking alliances with forwarder groups. Ian Putzger finds out more about the advantages to this approach

In March online service platform provider WIN struck a deal with the World Cargo Alliance (WCA) giving the forwarder group's members free access to its E-air Waybill platform for the remainder of 2016. At a stroke, the door was open to several thousand forwarders from around the world to file e-AWBs electronically to the more than 90 airlines hooked up to WIN.


Signing up the world's largest forwarder alliance promises a huge boost for the e-AWB drive, which has been struggling to meet its goals for traction. The prospect of harnessing a large number of small and mid-sized forwarders in one go was truly mouth-watering for WIN and the drivers behind the e-AWB initiative.


They are not the only ones who have forwarder alliances in their sights. Over the past couple of years a number of airlines have established formal relationships with such groups. Many are based on preferred partner programmes, but in some cases the ties go much further.


"The relationship between us and SME freight forwarders is increasingly important, particularly given the rise in entrepreneurial businesses through new opportunities to trade such as e-commerce. We have seen a huge increase in loose freight, which is a result of the rise in small businesses and online purchasing. Given the rise in the number of SMEs, the bodies that represent them are extremely important," says Warren Tempest, Head of Customer Solutions at IAG Cargo.


IAG joined forces with the WCA last year, on top of existing working relationships with other forwarder networks such as the WACO System, the Global Logistics Network and the International Freight Logistics Network.


According to the founder of the GLN group, Roy Stapleton, who later started another SME forwarder alliance – the Elite Global Logistics Network, more than 240 networks exist today. "It seems a new one comes out of the woodwork every week," he quips.


The more successful ones have also expanded at a blistering pace. In the first ten years after its inception, GLN grew to 417 members in 123 countries with an annual volume of some 5 million shipments and combined revenues of $8.7 billion. EGLN, which was launched in 2015, now has 187 members in 89 countries with annual revenue of $6.97 billion. They are all dwarfed by the WCA, which counts north of 6,000 members.


Dan March, Chief Executive Officer of the WCA, points out that SME forwarders have gained ground on the global stage vis-a-vis the multinational behemoths. WorldACD figures show that the top 20 global forwarders saw their market share in terms of revenues decline from 44.5% in 2014 to 43% last year, while it dropped one percentage point to 42% in terms of volume during that period. WorldACD numbers for the first five months of 2016 show that the volumes of the top 20 forwarders were down 3%, while the rest of the field collectively registered 2% growth.


According to an airline source, one large North American carrier generates about one-third of its cargo revenue from SME agents.


Besides gaining in prominence, SME forwarders also promise airlines better yields, as they do not have the same leverage to depress rates, says March.


Their membership numbers also make forwarder networks attractive targets for carriers, as a working relationship with a network harnesses a slew of agents, notes Tempest. Carriers that are working with the WCA are invited to the group's two annual conferences, opening the door to face-to-face meetings with a host of members. The conference format is embraced by most of the forwarder groups. >>

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