Selecting an International Freight Forwarder
Price, security, and compliance rank high on the list of criteria for selecting an international freight forwarder. Auctions have gained popularity, with freight contracts going to the lowest bidder. But choosing on price alone can leave a company shortchanged.
In the decision-making process, factors such as value, IT support, and service capability should be considered as well.
Doug Brittin, vice president of marketing, North American region, for Switzerland-based Panalpina, offers 10 tips for choosing the right freight forwarder.
1. Determine your overall requirements. Look at imports, exports, distribution and brokerage. Be clear about your objectives, and be able to compare freight forwarder responses equally. Think in terms of total cost, not just transportation cost by lane. Decide if you want a large or small partner. Look at the coverage necessary to support your business, as well as your customer service, information technology, and reporting needs.
2. Get internal management buy- in. This is the toughest part. Be sure that management is committed to making the change and your internal organization supports the decision.
3. Come to the negotiating table prepared. Have your demands ready. Specify your objectives and why you are seeking a new partner. Identify a target start date. Have the information on commodities and density, as well as terms of sale. Know your criteria; know your volumes by lane; and know the product and service levels you need.
4. Do your homework. Research the forwarders you are interested in. Know their financial strength, coverage, and local office. Talk to colleagues in your market about which forwarders they use and why.
5. Talk to the forwarders. Get out into the field. Invite these service providers to see you. Ask the forwarders what information they need from you so they can provide the best shipping solutions.
6. Build your Request for Quote (RFQ). Look over your current RFQ to ensure that it's complete and up to date. Provide sample agreements and the terms and conditions you desire.
7. Be selective. Issue RFQs to "qualified" companies you have pre-screened. Don't blast RFQs out to the world—you will not have enough time to do an efficient review.
8. Set a time frame. Determine a reasonable time frame for forwarders to reply to your RFQ. Set up a question-and-answer period with a minimum of three weeks for forwarders to provide comprehensive responses.
9. Narrow your choices. Go through the RFQs and invite forwarders who meet your criteria to a follow-up meeting—but have a conversation with them in advance so your concerns can be better addressed. Listen to their presentations, but ask questions based on their initial responses.
10. Negotiate the nuances and make your choice. Starting up with a new freight forwarder is just as critical as the selection, so set a reasonable time frame and appoint a team to get it done.