Procuring and managing the shipment of goods from all over the world is not easy.
There are countless moving pieces on your freight’s journey through different countries, geographies, and regulatory bodies.
Because the industry is evolving, with new technology and logistical concerns emerging all the time, we often hear about mistakes clients make when trying to choose a freight forwarder. We’ve even experienced some of these errors firsthand. Before taking the step of investing in a partnership, it helps to do some research on your forwarder as well as a little self-reflection on your part.
Cost vs. Value of Your Freight
Many people enter a sales conversation with price on their mind. While it’s important to understand your budget and cost potential, picking a freight forwarder solely on price before determining whether they’d make a good partner can be a huge misstep. A company might meet you on price, but then you have to ask yourself, “What aren’t we getting?”
With improvements in technology and an ever-evolving global economy, many freight forwarders add value through the depth of their services.
1. Reporting Tools
Freight forwarders that use transportation management software will be able to provide you with an easy way to track the status of your shipment.
2. Educational Resources
Whether it’s changes to industry regulations, questions about incoterms, or other related topics, you’ll want whatever company you choose to be a reliable source of information. This means seeing what kind of resources they make available to clients. Do they have content available that publicly demonstrates their expertise?
3. Single Point of Contact
There’s nothing worse than being handed off from one person to another when you have a question or concern about your shipment.
Before agreeing to a partnership, take time to understand what their team looks like during the shipping process. Who is accountable for what? What kind of turnaround time can you expect on answers? Ideally, you’ll choose a company with a single point of contact who can advocate on your behalf, and help you handle any issues that come up.
Freight Forwarding Capabilities
Providers often take one of two approaches to building an international network.
They might choose to set up their own offices abroad. In this case, you’re only dealing with employees of the parent provider you are working with. This can be a good or a bad thing. If service is great at every office – you are in a good spot. But if one of those offices has recurring service problems (and many of them do), you can’t avoid them without firing your forwarder.
If, on the other hand, your provider works with third-party agencies in some locations, these problems aren’t much of an issue. Your freight forwarder can quickly make changes and improve service delivery. Many of them also use a rigorous vetting process backed by international associations, such as the Worldwide Independent Network, which is focused on international trade.
Another facet to consider is your partner’s employees. You’ll want to get familiar with the level of experience your contacts at the company have. Will greenhorns be managing your shipments, or people who have been working this business for twenty-plus years? A forwarding partner with a uniformly inexperienced staff may run into more challenges than one with a few seasoned veterans in its ranks.
Set Clear Expectations for Communication & Reporting
Communication is crucial in successful freight forwarding relationships.
Before you decide to work with a particular forwarder, ask about the kinds of communications you can expect to receive once your shipping orders are in motion. Talk to your own team about the information they need from the forwarder to do their job, and make sure the forwarder can meet those needs.
Many companies will default to the minimum amount of information you’ll need – the day your goods shipped, when they’re scheduled to arrive, and an arrival notification. That’s fine for something you bought off Amazon, but it’s a far cry from satisfactory when you’re dealing with complex logistics and order fulfillment.
Your forwarding partner should provide you with a status report not only for the shipment’s status, but also what’s on the water and in the air. They’ll keep you appraised of what’s going to be shipped in the next month, what’s in transit now, and what’s going to be delivered in the next two weeks. They’ll also communicate information about strikes along your shipping route and other pertinent industry news, such as regulatory updates and policy changes that could affect your import logistics.
Incoterms are the rules that govern international trade. They were formalized in 1936 and have provided the backbone for international exchange ever since. Incoterms apply to any mode of transport, whether you’re moving freight on a plane, train, ship, or truck. If they’re used in an agreement, they dictate who pays for what during your shipment’s transit.
Before contacting a freight forwarder, you really should get to know your incoterms. For many companies, this will be common knowledge, but for businesses that operate locally on international goods, the incoterms might be unknown. Knowing your incoterms will help you clarify each party’s roles and responsibilities.
Ask your potential freight forwarder about their historical key performance indicators (KPIs). A thorough forwarding partner will have up-to-date KPIs that will give you a clear picture of their historical performance. If they do track KPIs, pay special attention to the following data:
How long does it take the company to get from point A to point B? And how often do they meet the expectations they’ve set for their customers?
How often do customers report errors in documentation? Are they mishandling or misplacing items? How often does inventory disappear, and is it being held up at customs checkpoints?
When you consider how precipitous the balance is between being overstocked and understocked, you can appreciate that accuracy is key for freight forwarders. If you’re delivering goods too soon, they’re just sitting there, taking up space, and eating up profit margins. If you’re delivering too late, it’s costing you. Does the forwarder’s KPI record show consistency in this balance?
Demurrage and Detention Charges
Shipping is all about timing. Especially since there are constant fluctuations in the supply and demand for transportation and storage.
There are two types of charges you can use to determine if your freight forwarder is going to be a reliable partner. Demurrage and detention charges are penalties incurred when either a carrier or consignee exceeds their allotted share of shipping’s precious resources: space and storage.
Demurrage fees are charged when full containers are left in terminals beyond their allotted time, whereas detention fees are charged when a company is late to return containers to a carrier. Although some factors, such as strikes or weather events, can put these unexpected fees outside your freight forwarder's control, it can otherwise indicate sloppiness in an industry where timing and reliability is everything.
Know What You Want
Have an idea of the ideal partnership before you begin comparing forwarders. Spend some time clarifying the terms and values you expect from the forwarding partner.
Think through your costs, how important timeliness is to your shipping, how you’d like communication to work, and what kinds of resources might be helpful to your team. If you know what an ideal experience looks like, you can use that to help uncover the right partner for you.
You want your freight forwarding provider to be a long-term relationship. It could take a lot of work up front to find the best partner, but it’s important to go into conversations understanding how freight forwarders think about your shipment. These five things should help you find a freight forwarder who you can hire for the long-haul.