Business operations can be hard for logistic companies, especially when they have to consider the variable operational expenses. To avoid any such hazards in the freight business, company owners come together and form associations to operate globally. These alliances are increasing in number due to the benefits it offers to the members. In return, the members can cater to the needs of the customers.
What are freight associations?
Freight associations are formed to serve the interests of the logistic companies. These companies transport goods by sea, air, rail, or road. Various companies join freight associations to work together to cover the different trade routes across the whole world. All of them share common goals that benefit everyone. By everyone, we mean both the logistic companies as well as the customers. Both get good benefits in terms of better rates, transport time, insurance coverage, routes, etc.
Importance of these associations in global trade
When a company chooses to join a freight association, many possibilities open up. If a logistic firm decides to work on its own, it may face many challenges like –
- higher transportation costs
- shortage of carriers or vehicles to transport goods
- higher port charges
- unable to transport goods within the stipulated time
- unable to provide service coverage
Many of the cost factors related to transportation are variables that can fluctuate at any time. Associations come into play to bring an end to all of these problems. When a freight company becomes a part of an alliance, it reduces the variable costs involved considerably. It is possible because it enables the company to use shared resources like networks, transport routes, containers or vehicles, port terminals, etc. All the members can use the resources of others to carry on their business smoothly.
Rules and regulations to be followed for joining a freight association
There are many associations across the globe, and the freight member regulations for joining one alliance will differ from the other. However, there are some general rules one needs to follow.
- Your logistic firm must be in the business for a few years. Your company must have experience in the field of logistics. This rule is applicable for any firm that wishes to join an alliance. It is done to assure the existing members that only professionals are accepted to be a part of the association.
- If the first requirement is met, you will need to submit an application to the concerned association along with the necessary documents.
- The application will be reviewed, and the alliance company will decide whether to accept you or not.
If you get accepted into the association, you will have to keep in mind that –
- All the members share equal rights within the organization.
- You can leave the organization anytime you want to.
- If you decide to leave the association, you will not be able to use any name or logo associated with the organization.
- No defamatory remark by any means will be encouraged or tolerated.
- As a member, you should be ready to offer your best service to the alliance.
- All the partners of the organization have to pay a minimum yearly percentage of their business (varies from one association to the other) to the association.
So, if you are planning to join a freight association; then acquire thorough knowledge about the requisites and go ahead with your plan.