By Jennifer Chang 

70% of supply chain management and logistics professionals expect pressure on global supply chains to continue until the end of 2023. Freight forwarders and logistics companies are having to deal with an increasingly chaotic post epidemic era.  More businesses are running into bottlenecks, labor shortages, geopolitical tensions and an increase in the frequency of extreme weather are putting increasing pressure on an industry already struggling with high inflation. Among the growing challenges facing freight forwarders and logistics companies, the threat of currency fluctuations is one of them.

According to the International Chamber of Shipping, 90 percent of world trade is carried by shipping, with more than 50,000 merchant ships in international trade. Shipping is the main mode of transportation for international trade, so the global nature of freight forwarders and logistics companies makes them particularly vulnerable to foreign exchange fluctuations. Traditionally, many companies may be thinking about trade risk rather than foreign exchange risk. And when foreign exchange fluctuations become more and more frequent, freight forwarders and logistics companies must start paying attention to foreign exchange risks. Currency fluctuations are an international risk that must be taken into account.   The foreign exchange market affects international shipments. Customers are often paid in a variety of different currencies in different parts of the world, which means that payments naturally need to be converted into local currencies. Foreign exchange risk can no longer be considered a secondary risk.  

In such cases, freight forwarders and logistics companies need to develop effective risk management programs to address the threat of these foreign exchange fluctuations. For example, the impact of currency fluctuations can be reduced by diversifying the business. Such as expanding market size, expanding business routes, providing services in different countries and regions, etc.   Furthermore, we have strengthened our communication with customers and suppliers to understand each other's needs and constraints. This helps reduce the uncertainty associated with currency fluctuations. Remain alert to foreign exchange market movements and keep an eye on the global trade and supply chain. This leads to a better understanding of market trends and risk factors.

In summary, foreign exchange volatility is one of the serious challenges for forwarders and logistics companies. Freight forwarders and logistics companies need to develop systematic risk management strategies to meet these challenges, and constantly adjust and improve these strategies according to market trends and risk factors to ensure that they can continue to thrive in this challenging environment. Freight and logistics operations are closely related to currency fluctuations, and the effects of currency fluctuations are ubiquitous. Therefore, freight forwarders and logistics companies must formulate appropriate strategies to adapt to the impact of currency fluctuations to ensure stable business operations.

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