By Dr. Segun Musa
God Almighty is the first freight forwarder. God is marvelous because he wants people to be freight forwarders. Freight forwarding is the first industry in the world.
God decided to distribute resources in odd manner because he wants everybody to practice freight forwarding. He did not distribute it evenly. It means that if China has Gold, United Kingdom (UK) will not have Gold, in that case, China will supply UK Gold and what China lacks, UK has, she will supply China.
For example, Nigeria has Cocoa, UK does not have it, she needs Nigeria’s Cocoa to produce chocolate. In other words, countries depend on one another for survival. God deliberately did that so we can all practice what is called freight forwarding.
What is freight forwarding? In a lay man’s explanation, it is the efficient practice of transport system deployed to move goods and services from one location to another through a most cost effective medium. So, as freight forwarder, you design the best mode of transportation to carry any good from one location to another.
There is a difference between a transporter and a freight forwarder. A transporter is the owner of the vehicle while a freight forwarder is the one with technical know-how of how goods will be distributed from one area to another.
So when talking about freight forwarding, it’s about a professional that will take care of the movement of goods so as to know the kind of transport that would be suitable for the goods. For instance, you are carrying perishable goods and you don’t have a registered vehicle or cold van, the whole perishable goods will be damaged before you get to your destination.
So you don’t carry vegetables, Tomatoes from Kaduna to Lagos without using the right transport system. They require a pre-determined temperature. To a lay man, you just put it into “Danfo” and say, “take it to Ibadan”. If it is not within the temperature that has been designed for it, before it gets to Ibadan, it will perish.
Whoever that is going to be a freight forwarder must be very wide in knowledge to understand what the requirements for each item to transport from one location to the other and to be able to coordinate effectively.
It is a profession that requires mental alertness. You could run an evaluation and see how you can take the most efficient option for the best and better outcome. We see occasionally, if you want to transport one commodity from one area to another, you can deploy different modes of transportation.
You look at the cost and you also look at the time. You don’t necessarily need to go to Dubai market to go and buy quality shoes and bags that are produced in China. They don’t produce them in Dubai but do you know why they prefer going directly to Dubai? It is because number one: When it has been produced in China, they will transport it to Dubaii through Ship, Dubai will freight it to Nigeria. If you want to take it by air from China to Nigeria, it will be more expensive. So it’s cheaper when you buy from Dubai than to go and buy from China.
Again, we are also looking at the fact that freight forwarding is capital intensive. That requires long time strategy, practice and deligent operation for the required impact on the freight forwarding industry.
The industry is scattered, no doubt about it, because if you want to be a super freight forwarder, you need to have basic infrastructure required to move Cargo from one location to another. Hence, the need as we usually advice, that you can actually form synergy, especially in the modern world.
So when you hear that the profession is capital intensive, you can have good knowledge about the industry. You can start from small and begin to grow it. You can start from courier you move from one area to another. It is still part of the freight forwarding.
THE MAKING OF A SUPER FREIGHT FORWARDER
You can find freight forwarding under three brands, while specializing in cure interest and department of the business. Haulage Warehousing, Shipping, Cargo Clearing Logistics Administration, Finance amongst others. Admitted, we have different components of freight forwarding. Freight forwarding is just like holistic name for all activities that involves movement of cargo from one area to another. But you can actually specialize on area of interest. You might decide to start from packaging. For instance, the office wants to move to another location, you can say let me package your equipment for safety and proper handling.
Freight forwarding is a cheap business that every individual can start practicing within the area of more competence you want to start with. This is essential to enable proper turning of your person into a well-rounded person as a freight forwarder. You don’t have to start big. You can be Haulage agent.
You don’t have Haulage of your own but you know people that have trucks here and there. You can be their agent and at the end of the day, you have your commission .We can have people that can decide to be an intermediary. You can also decide to enter into warehousing. All you need to do is to look for direction of their office and write them that I want to be your agent. Whoever wants to make use of any storage facility, I will link you to them and I will take my commission.
Yours is to look for people who are into manufacturing or trader that have goods they want to warehouse. And you meet the owner of the warehouse and at the end of the day, you both will agree on commission and the deal is done. You can be exporter agent or importer agent. You can be packaging agent, you can be transport agent and you can equally be warehouse agent and so on. You don’t have to be the owner of that business while starting.
You can just start small. Write a proposal to the company and state the kind of service you can render to them. At Apapa, lots of people are doing haulage services .You can also follow them and within a short period of time, you master them. In other parts of the world, people are making money through these services.
So, it amuses us when people continue to say that there is no job. Because the business is everywhere but it behooves on us to identify all these opportunities that are just within our finger tips and we don’t just know. Go to China today, you will see a lot of people who work as agent and are comfortable and living fine.
There are four major mode of transportation: Road, Rail, Water, and the Air. The Road is most common. For instance, if you want to buy something at Lekki or Idumota you must go by road; regardless of the volume of whatever you want to buy.
Again, you cannot go to Mushin with aircraft. You can’t go to Apongbon with Train, you can’t go with Ship. But when you are talking about long distance, you go by air or Ship or when you want to go to long distance that has volume, you can also go by Rail which is cheaper.
The cheapest mode of transportation is Rail. That’s why government says it wants to start Inland Container Depot, (ICD)so if I’m a manufacturer in Aba, Sokoto or Enugu; once my ship arrives the port, I just take it down to my final destination, inland container depot closer to my house or my company and at the end of the day it will be received.
When you use haulage to transport Inland Container Depot (ICD) that shipment will be landing at an expensive cost. So you will prefer to clear in Lagos and deliver. You only need Rail to cut cost because it’s cheaper and can carry volume.
Even if you are using Donkey to transport goods, it’s still mode of transportation. If you are using Camel, it’s still mode of transportation. But these are the old mode of transportation. Though, up till now people are still using them especially within the desert area. Another mode of transportation that is not too common is Pipeline. It lifts the Petroleum Motor Spirit (PMS) Diesel, Kerosene.
It is unfortunate that it is in the exclusive list. That means it’s only Government that can run Pipeline in Nigeria. But in other countries, people lay Pipelines and they make their income. So Pipeline is another mode of transportation that probably in future, private sector will also be investing in. You must have heard that the Government is trying to revive the Rail system in Nigeria but it’s difficult. And the reason it’s difficult is because there is no agency that can really package it.
All over the world, no government disregards private sector participation. The only thing government needs to do is to have an agreement with the private sector so that they can also invest. You give them the right of way where they can lay their own Rail and they will buy their own wagons and so on.
There are areas that government cannot explore that require private sector participation. We have been engaging Nigerian Railway and I hope that very soon they will open up a private participation. Another area you can explore if it’s open is to be an agent to Railway. You don’t have to buy coaches, you can chatter coaches the same way we chatter aircraft and so on. We can come together and chatter a coach from Lagos to Sokoto.
So when you chatter that coach, you now begin to look for people that want to transport it towards the corridor that Rail is following down to Sokoto. So maybe going to Ibadan, you collect their own goods, load and collect your money.
People going to Enugu you collect their goods, load and collect your money. So by the time you fill that coach, when you calculate all the money you charged and the space it’s occupying, all you need to do is just to pay the Railway Authority their own dues and the remaining money is yours.
As time goes on, you might end up haring 5-10 coaches on railway only you and you make a lot of money. The Railway Authority will make their money and you will make yours.
So it’s an economy that will open up very soon. So get prepared because it will happen very soon. When this happens, you can also begin to look at the aircraft. You buy space in aircraft and you look for consolidators who can bring things together like DHL, Ups among others.
You gather and consolidate all their goods and they give you volume. With that volume, you meet the airline that you want to buy space in their aircraft. By the time they give you space and you pay, when you deduct how much you are earning, you will see that your profit is reasonable. Because of the volume that you are bringing, the airlines will give you at cheaper rate.
The rule of any conveying of any goods from one place to the other especially through air is the higher the volume, the lower the price. So if you are presenting this to airline, what they will be charging you might be equal to what they will charge you for airlift. So it’s better to get a volume like this and make more money. And by the time you will be giving the owners of these goods, their rate and they will be comparing it with what the airline will give them, they would rather come to you.
Richard Brandson was travelling one day and he got to the airport and saw a lot of passengers stranded as a result of strike. He met the management of the airlines and said if they want to chatter their aircraft, how much should they pay? They gave him the figure and he made a quick calculations. This aircraft can take fifty people and they are more than fifty and the aircraft can be chattered at $500 and will make $100 each, I will be making a lot of money.
So he said that he will pay and he called on the passengers that if you want to travel, it’s $100. Before you know it, the aircraft filled up. He paid a token out of that money to the owner of the aircraft. He was amazed at what he made. And that was how he invested in airline and later he has out of the business one of the biggest airlines Virgin Atlantic. So the opportunity will always be there for you. But you must be able to identify it when you see it.
The ability to identify that opportunity makes you a super freight forwarder. You must do self-reflection: Are you fit for the business? How do you know that you are fit? It is a tough business, considering the chain we are in.
It requires an uncommon skill. Can you go through a pressure of looking for clients? Can you work under pressure? Can you work with various categories of companies and remained unruffled? Knowing that if you did not provide satisfactory services, it may affect your reputation. Will you be able to manage all these things? You know when you have a business you have a reputation.
Your business has to go with reputation. That is your marketing strategy or tool. If you get your first reputation right in the industry, everybody will know because, all the importers and exporters have a link. Some of them patronize the same consolidators. If you don’t get your regulation right, you miss it. So you must have integrity and you must have skill required to be able to make impact.
The first thing you need when you come into the industry is to know the job. When you know the job, money will start looking for you. You won’t look for money at that stage. Acquire the right skill and knowledge because they are very important if you must go far in the industry. They will differentiate you from the pack.
Some people when they make money in the industry, they use the money to do buy-buy, they begin to do projects they did not plan and going into other businesses they know less or nothing about. And before you know it, they burn their fingers. They want to buy cars and latest cars. If your business gives you money today, invest a reasonable percentage of that money into your business.
That’s how to grow business. By the time you spend everything or you diversify into another business without consolidating the one that brings the money and other one you are not sure of you are most likely to fail.
A man thought he had so much money and built filling station without knowing anything about filling station, his staff used his filling station to build their own filling station. At the end of the day he shut down the filling station. The business that is bringing money to you, continue investing and expanding it.
