Freight Forwarders may soon have to give up on extra profit margins

In a bid to promote transparency in the Indian freight forwarding sector, Union Ministry of Commerce is mulling to issue a notification in November that will restrict Freight Forwarders from keeping additional profit margin on freight. The notification will also mandate providing an invoice of carrier charges to the exporters.

The ministry is very keen to promote transparency for bringing down the overall logistics cost down to less than 10% of the GDP. According to a senior official of the ministry, “Transparency by forwarders towards exporters is non-negotiable and an official notification can come out in the month of November regarding the same.”

If this notification is issued then forwarders will not be permitted to keep any profit margin on freight. In this case, the profit margin has to be charged as Service Fees or Handling Charges and taxes will also be calculated on the same.

AV Vijaykumar, Chairman, Federation of Freight Forwarders’ Association in India (FFFAI) told Logistics Insider, “The draft is in the discussion stage and we are in full support of this initiative as it will help in bringing down the logistics cost. However, there are certain issues on which we have given our suggestions to the Ministry of Commerce for the benefit of exporters.”

Federation of Freight Forwarders’ Association in India (FFFAI), The Association of Multimodal Transport Operators of India (AMTOI), Consolidators Association of India (CAI) and other associations are in touch with Special Secretary (Logistics) to finalise the draft.     

Further to it, the union government is also working on an action plan to
align time-to-export/turn-around-time at airports and ports
as per the
international standards. The plan will be implemented by December this year.

According to the plan, actual turnaround times will be published on a real-time basis of each port and airport in order to give them a push for improving their performance.

Read more about the current situation air cargo business.

3 thoughts on “Freight Forwarders may soon have to give up on extra profit margins

  1. This is insane. Are they really serious? How come you can bound/restrict someone to keep the profit margins as per their selling skills, you are not only killing margins but you are killing someone’s skill set. If this is the scenario then shut down all the institutions and universities where aspirants Opt for specialization like Sales and Marketing. This is an open market where everybody has the right to sell as per their Strengths and skillset. Exporters and Importers are not being robbed or nailed down by higher freight rates or any irrelevant freight charges, competition is such where you are simply not able to keep good margins , we are already in that phase, why we are doubling the impact???

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