This time, let`s take a look at how to choose a good freight forwarder.
A freight forwarder is an international logistics company, which you would use to ship cargo overseas.
Here is a question. Do you consider a freight forwarder well before you ship cargo?
You may not bother, as the company you deal with currently is a major name freight forwarder.
There are a lot of freight forwarders in the world, however, if you do not choose the most effective company, you may be charged high costs for shipping cargo.
The company may tell you that they are unable to ship, even though it is possible to send, and the cargo may be held at customs every time due to lack of their experience.
Therefore, it is very important to choose the most effective freight forwarder for you.
My business is located in Thailand. There are nearly 100 Japanese transportation companies, that are registered on the Thai-Japanese Chamber of Commerce.
When I checked these companies on the list, I found that most of them operate freight forwarding businesses. Why are there so many freight forwarders in the market?
I guessed that the reason why there are so many forwarders in the market as below.
・Not much initial investment
A freight forwarder does not require assets such as vessels or airplanes.They are able to start their business without holding any assets.
・Thera are less fixed fee
In Thailand, there are companies operating with one Japanese person and four Thai people.
・There are so many different logistics
Transporting goods sounds easy but is actually complex. Different logistics arrangements need to be made based on the content of the cargo, delivery location and customer request.
Therefore, although there are many different companies offering logistics services,you will be able to get certain jobs.
You may think you can arrange logistics arrangements directly with a shipping lines, and a truck transportation company without using a freight forwarder.
Actually, it is possible to make transportation arrangements by yourself. However, it is not very efficient.
If you are not shipping high volume like a large company, costs will increase.
If your company needs to send a container but only have volume of 1 or 2 containers per month, the charge for ocean freight cost from the shipping line will be incredibly high.
A major freight forwarder will transport hundreds and thousands of containers each month.A freight forwarder works as an agency for a Shipping Lines ,and they receive a discounted price.
Therefore it is cheaper to use a freight forwarder than booking a carrier directly.
There are different methods of cargo transportation, and arrangements that need to be made for logistics.
・Booking a shipping line and an airline
・Trailer arrangement with a transport company
・Customs clearance arrangement with a customs broker
・Making arrangement with a packaging company, if packing is required
・Contacting a heavy load company, if the cargo is heavy
・Is there is less cargo, arrange consolidated service
・Contacting a specific transportation company, if the cargo will cross international borders
・Contacting a refrigerated warehouse company, if you need to store frozen cargo
However, if you ask a freight forwarder to make the logistical arrangements, they will deal with all of the specific requirements.
A good freight forwarder with experience will choose the most cost effective method to ship your cargo. Therefore, professional freight forwarders who have experience of shipping cargo overseas are required.
By now, you are able to understand the necessity of a freight forwarder. Now, if you are going to use a freight forwarder, which company do you need to choose?
We will go through the content of a freight forwarder role, and explain the key points to look at when choosing one.
The first point is to understand, the strengths and the weakness of a freight forwarder.Not all freight forwarders can arrange all logistical arrangements smoothly.
Our company is part of a group business in Thailand. They are companies dealing with freight forwarding and customs clearance, and they specialize in the following.
• Asia and South-eastern Asia
• DG cargo
• Air shipment
• Refrigerated cargo
For example, if you want to send DG cargo and use a freight forwarder who does not specialize in DG cargo, the cost will increase. Also, they will be unable to deal with problem as they happen.
If you intend to ship DG cargo, you need to use a company which specializes in DG cargo.
The second point is to understand, that the transport space of ocean freight vessels and air plane are limited. You are unable to ship whenever you like.
Especially prior to extended vacations such as New Year, National Day holiday, Songkran, and Golden Week, as space will be very limited as companies will ship, before the vacation starts.
You may be required to ship urgent cargo on behalf of a customer. A freight forwarder who is able to secure space during high seasons, is a strong player.
Once cargo can be transported safely and on time, the next thing to look at is cost. The product unit price will increase if the cost of logistics is high.
If the cargo can be transported safely and on time, reduced cost transport will be preferred.
Companies who can provide a competitive price are strong forwarders. Now, where does this competitive price come from?
This depends on the volume of cargo the freight forwarder deals with, and the sales person in charge. If they are dealing with high volume, the shipping line will provide them with a special rate.
If the sales team sells at a higher price, then the cost will be naturally high.There is a case that the sales representative sells at cheaper price to obtain additional work, the quality of their service may decrease.
So, it is important to maintain the balance.
A freight forwarder does not own vessels or airplanes, however they deal with different shipping lines and airlines.
Therefore, they can provide different options on price, schedule and free time to their customers. Customers are happy for many choices.
There are freight forwarders who only deal with a specific shipping line or airline. However, a customer will gain additional benefits from dealing with a freight forwarder, who can provide more choices.
Customs clearance is a hurdle for international transport. You are unable to ship whatever you want in cross border transportation. You may be required to have a permit or register items.
It is important for a freight forwarder to be able to communicate this information, to their customers in advance.
Good freight forwarder will be able to ship cargo smoothly, without the cargo being held at customs clearance.
Good freight forwarder who employs an experienced customs specialist can deal quickly, and efficiently, this is how our company operates.
An exporting freight forwarder and an importing forwarder located in two different countries, co-operate with each other to ship international cargo.
A large company has many branches overseas and there are freight forwarders, who have a network of agency contracts.
If two countries do not communicate effectively,it may cause delays with customs clearance which will affect the delivery schedule.
Important factors are to check that the importing country has a branch or agent.
Also, check if they have good communication skills where they communicate regularly.
A freight forwarder is a service business. If a forwarder is able to provide good service and work with good attitude, the customers will be easy to work with, and will have a positive feedback toward them.
It is important to have a quick response and flexibility, toward complicated requests when choosing a freight forwarder.
To provide a good service, it is important to maintain high level cooperation within a company. Roles and responsibilities differ between each company.
However, it is important for sales representatives, customer services and customs specialists to work and cooperate effectively.
If effective communication is not maintained within the team, the customer will be unable to forward issues, and concerns to the appropriate person.
Customer will not be able to proceed the jobs, when they cannot contact to person in charge.
Also, if a sales representative leaves a company, the customer will necessarily know who they need to contact. This happens a lot in Thailand.
This time, we had a look at how to choose a good freight forwarder, from freight forwarder management point of view.
There may be advantages to use smaller companies, because of representative experience level, quick response, teamwork and flexibility.
I suggest you to consider the better logistics arrangements in the future, to choose the best freight forwarder.