October 2009 | Commentary | 3PL Line

Choosing and Using a Freight Forwarder

Tags: 3PL

Choosing the right freight forwarder to support your transportation efforts can mean the difference between satisfied customers or unhappy ones; efficient, cost-effective distribution of your products or careless, wasteful handling of them. The following are some suggestions for choosing and using a freight forwarder.

DO YOUR HOMEWORK

Before entering into negotiations with a logistics provider, analyze your own transportation procedures and determine your requirements. Consider factors such as the volume of shipments the new agent will be handling.

Will your shipments move primarily via ocean, air, or truck? Do your ocean shipments consist primarily of container loads or do they sail as breakbulk or heavyweight freight? If your product moves via air, will most of the cargo fit into the bellies of passenger aircraft or must it travel via more expensive main-deck configuration? If the freight moves by truck, is it a full truckload or less than truckload?

Be clear about what your company expects from a potential vendor. The better you define your logistics requirements, the better and more specific the forwarder's proposal will be.

READY, SET, NEGOTIATE

Don't leave negotiations solely in the hands of your company's traffic group, as competent as they may be. Draw upon the knowledge and expertise of other internal departments, such as finance, marketing, purchasing, and information technology. Also, involve senior management in the negotiations to determine their priorities.

In order to get the best bang for your transportation buck, know and understand your company's internal value equation—the best combination of rates and services. Then communicate these values to the potential service provider.

Learn as much as you can about the forwarder's resources and capabilities. Does it possess a network of domestic and international offices? How extensive are they? Does the logistics provider have a skilled, experienced workforce who can move not only routine shipments in an efficient, hassle-free manner but who have the ability to respond to emergencies with cool-headed judgment and decisive action?

Who are the forwarder's preferred carriers? Be wary of the forwarder who claims "cheapie" carriers save you money and are just as good as the leading carriers. That claim may be disingenuous, having more to do with fattening its bottom line than moving your freight.

On the other hand, using a large carrier does not necessarily ensure excellent service. Ask your forwarder why it uses potential service providers as opposed to no-name carriers. The more a shipper learns about a forwarder and its way of doing business, the more obvious it will be whether the relationship is a good fit.

AFTER THE DEAL IS SEALED

Your signature on a contract is only the start of a complex, yet hopefully satisfying, relationship with one of your key vendors. After signing the contract, meet with the forwarder's staff to discuss thoroughly the processes and procedures detailed in the new agreement. Develop a realistic implementation and work schedule that both parties can adhere to.

Choosing the right forwarder can help shippers focus on broad management strategies, and leave the nitty-gritty business of moving freight to the experts.