Shipper’s Choice: One Freight Forwarder or Many?
Many shippers rely on forwarders as key building blocks in creating and implementing a logistics program. Some use a single forwarder or third-party logistics provider to forge and maintain supply chain links. Others choose a multi-forwarder approach. Which is best for your team?
Advantages of using a single forwarder include:
- Accountability. Mistakes can be more easily pinpointed when they emanate from a single source. More importantly, errors can be corrected with far greater speed and with a minimum of finger pointing.
- Concentrated freight booking. With one forwarder handling all the shipper's cargo, contract goals can be met more easily. Cost savings are maximized when using the forwarder's preferred air and ocean carriers.
- Integrated technology tools. Coordinating technology between a shipper and a single forwarder is easier, faster, and less expensive than integrating multiple agents' systems into a shipper's IT operation.
- Single service standard. Service levels invariably differ among forwarders. With a single source, the shipper generally obtains consistent service throughout its supply chain.
- Centralized billing. Processing vendor payments, adjusting charges, and correcting billing mistakes is far simpler when dealing with one forwarder rather than multiple agents, particularly if international invoices are involved.
THE MORE THE MERRIER
Advantages of using two or more forwarders include:
- Greater experience and knowledge. No single forwarder has all the answers. One consolidator may have superior knowledge of local suppliers, and a better feel for an area's business climate. Another forwarder on the shipper's logistics team may have close and long-standing relationships with local management at air carriers and shipping lines.
- Meeting the shipper's diverse needs. Within shipper organizations, particularly those that are multi-national, separate operating units are common. These units require particular knowledge and experience in moving their products. One division may need substantial heavyweight or breakbulk shipping. Another may use intermodal transport for most of its cargo. With a multi-agent approach, the shipper benefits from forwarders' specific skills.
- Creating competition among forwarders. Shippers with multiple consolidators on their logistics team can exert leverage for additional services and price concessions.
- Reducing vulnerability. With many forwarders handling its cargo, the shipper has back-up if one is not meeting planned logistics objectives.
- Greater geographical coverage. Even the largest forwarders can't be in all places. They have a finite number of offices. With two or more agents, the shipper's local coverage expands. There is less need for independent agents who may be of varying quality.
GETTING THE RIGHT FIT
Before building a logistics team, shippers should know exactly what they need. Do they want a simple transaction from Point A to Point B handled by a single forwarder? Or do they need a total logistics package from inventory control to customs brokerage capabilities requiring multiple forwarders? Defining these requirements will help shippers build a team that fits.