Collaborate to survive: The new imperative for freight forwarders

As stewards of $52 trillion in annual global trade, freight forwarders occupy a critical position in ensuring the smooth flow of goods across borders. They operate in a uniquely privileged yet increasingly complex environment—one shaped by shifting geopolitical dynamics, rapid technological disruption, regulatory tightening, and rising customer expectations. At the heart of this evolving landscape lies an urgent need for enhanced cooperation among customs administrations, freight forwarding communities, and multilateral bodies like the World Customs Organization (WCO).

In a recent keynote address delivered by the Chair of the WCO Council, key challenges and solutions were laid out with clarity, empathy, and purpose. Drawing upon these insights, this article explores the multifaceted hurdles freight forwarders face today and outlines collaborative pathways to create a more efficient, secure, and sustainable global trade ecosystem.

The 5 core challenges freight forwarders face

1. Regulatory complexity and compliance pressures

Global trade regulations are increasingly sophisticated and divergent across regions, making compliance an uphill task for freight forwarders. While efforts such as the WCO SAFE Framework aim to harmonise procedures, a lack of uniformity persists in practice, particularly in developing economies.

This fragmented regulatory environment leads to delays, increased costs, and an uneven playing field. Small and medium freight forwarders, especially in the Global South, find themselves disproportionately affected due to limited legal and compliance resources.

2. Technological disruption and cybersecurity risks

Artificial Intelligence (AI), blockchain, and the Internet of Things (IoT) are transforming the logistics industry—but not without risks. While AI enables powerful tools like predictive analytics and automated risk assessment, the same technologies can be exploited for cyberattacks.

According to the WCO, over 1.2 billion customs transactions are now processed daily with AI-enabled tools, boasting over 90 per cent accuracy. However, many developing countries and smaller logistics operators remain digitally excluded due to limited connectivity, funding, and technical expertise—creating an urgent need to bridge this technological divide.

3. Capacity constraints and global supply chain disruptions

Ongoing geopolitical tensions—such as the Red Sea crisis, China–U.S. trade wars, and the war in Ukraine—have contributed to bottlenecks and cost escalations in the freight market. Add to this the unpredictability of natural disasters, a global shortage of truck drivers, and infrastructural bottlenecks at land borders and ports, and freight forwarders face an environment riddled with volatility and uncertainty.

Africa’s inland borders, for instance, suffer from poor infrastructure and time-consuming processes, often adding days to transit times. Meanwhile, port congestion in major hubs like Shanghai and Dubai drives up freight rates globally.

4. Sustainability pressures and decarbonisation demands

With logistics contributing significantly to global CO₂ emissions, governments and consumers are demanding cleaner supply chains. Initiatives like the EU’s Carbon Border Adjustment Mechanism (CBAM) are expected to impact up to €70 billion in imports from 2026 onwards.

Freight forwarders are now being asked to offer low-carbon alternatives—like green fuels and carbon offsetting—while managing tight margins. For larger players, the transition is possible through millions in R&D investments. However, smaller firms struggle to absorb the additional 10–20 per cent costs associated with cleaner technologies.

5. Rising customer expectations and e-commerce explosion

The global e-commerce market surpassed $6.5 trillion last year and continues to redefine logistics demands. Consumers now expect same-day delivery, real-time tracking, and seamless returns—pushing freight forwarders to optimize every touchpoint of their operation.

Yet the “last mile” problem persists. Delivery costs have risen over 10% in the last decade, and the discrepancy between brick-and-mortar and online pricing continues to create friction. Additionally, the imposition of minimum duty thresholds in some countries could increase e-commerce import costs by up to 10%.

Collaborative solutions: Forging strategic partnerships

While the challenges are formidable, they also present an opportunity—perhaps even a mandate—for stronger, smarter partnerships. Here are five high-impact areas where customs administrations, freight forwarders, and institutions like the WCO can collaborate:

1. Co-development of AI-driven compliance tools

A key way to tackle regulatory complexity is through the co-creation of smart compliance solutions. The WCO’s SAFE Framework, already adopted by most of its 186 member states, offers an ideal foundation for integration with freight forwarding systems.

By working together to build AI-powered classification tools, automated Harmonized System (HS) coders, and sanctions-screening modules, governments and freight forwarders can significantly reduce errors, delays, and compliance costs. For instance, Singapore’s TradeNet system has reduced clearance times by 40 per cent and error rates by 30 per cent—a benchmark others can emulate.

2. Expanded capacity building and training

Digital transformation is only as good as the people behind it. A concerted push toward training and skill development is essential to enable widespread adoption of technologies such as AI, blockchain, and paperless trade.

The WCO already runs training for customs officers through its global learning platforms. By extending this to private-sector freight forwarders—especially SMEs—through public-private training partnerships, stakeholders can address gaps in AI literacy, compliance with regulations like ACAS or CBAM, and ethical data management.

3. Joint infrastructure and data sharing platforms

Customs agencies and freight forwarders must co-invest in shared platforms to improve real-time visibility and operational coordination. Systems like India’s ULIP (Unified Logistics Interface Platform) or South Africa’s Customs Modernisation Program, which uses AI for risk profiling, show what’s possible.

Public-private partnerships can also drive infrastructure upgrades in bottleneck-prone areas, such as land borders and minor ports, bringing lasting efficiency gains.

4. Sustainability through collaborative innovation

Rather than expecting freight forwarders to go it alone on decarbonization, governments can play an enabling role. Green finance schemes, subsidies for electric fleets, and tax rebates on low-emission technologies can help smaller operators keep pace.

Additionally, collaborative projects—such as port electrification, green corridors, or the pooling of data to track carbon intensity—can help align incentives and share the cost burden.

5. Bridging the digital divide for e-commerce enablement

While e-commerce is a growth engine, 2.9 billion people still lack access to basic digital tools. Governments and trade bodies should collaborate to expand digital literacy programs, provide cloud-based logistics software to smaller players, and encourage inclusive participation in global trade networks.

Policies that harmonize tax thresholds and balance the interests of online retailers with traditional stores can also ensure fairer competition and smoother operations.

A call for elevated partnerships

As emphasized in the WCO Chair’s remarks, partnerships must rise above narrow transactional interests. True progress will be defined not just by faster clearance or reduced costs, but by achieving broader goals: security, sustainability, fairness, and resilience.

Freight forwarders are not just service providers—they are the arteries through which the global economy pulses. Their success, or failure, impacts everything from food security to industrial growth. Recognizing this, customs administrations and industry leaders must work shoulder to shoulder to redesign the logistics ecosystem for the 21st century.

Only then can we turn today’s challenges into tomorrow’s competitive advantages—and deliver not just goods, but shared prosperity across borders.

(The above article is based on the speech Edward Kieswetter delivered at the FFFAI 25th Biennial Convention.)