How to Choose a Freight Forwarder

There aren’t many professions with fewer requirements than freight forwarders, with one shipping expert, Hariesh Manaadiar, saying, “Any Tom, Dick, or Harry can call themselves a Freight Forwarder.” Now that’s all good and well for those who make a living as freight forwarders, but it can make it difficult on those who depend on freight forwarders for their own businesses. Mostly those who depend on freight forwarders are smaller businesses which are not yet large enough to have a contract directly with international shippers such as a company like Wal-Mart would have. Some freight forwarders also have contracts with shipping companies that enable them to get the best prices because of the sheer volume of freight that they deal with; other freight forwarders are smaller and act as intermediaries between businesses and the larger freight forwarders who have the good deals. This second type of freight forwarder is typically the type that should be avoided, if at all possible, due to the added costs of going through this kind of intermediary. Even when you know that some freight forwarders are better than others, choosing a freight forwarder for a specific shipment is still not an easy task, and as such we have put together a series of tips on how to effectively choose a freight forwarder.

Know What You Need

This may seem like an obvious statement, but it is something that bears mentioning because if it is ignored, a good experience with your freight forwarder will be down to blind luck. In business, one should limit reliance on luck. Knowing what you need from freight forwarding comes down to knowing the specific services that your product requires in order to arrive in one piece, and the relevant risks that may need to be insured against. For instance, if you are shipping something that needs refrigeration, then you should only look for freight forwarders which can accommodate refrigeration. Or if you don’t have the ability to get your products from the port once they are in the country, then you will need a forwarder that has a truck network available in your country. You should also know when you need your product to arrive so that you can communicate that to the freight forwarder and make sure that they will be able to get your product delivered in a timely manner. Additionally, you should know ahead of time how much you plan to ship so that you can contact a forwarder which offers both full containers and less than container loads (LCLs). Another important factor to consider is whether your cargo is subject to any specific regulations that your freight forwarder could have trouble dealing with so that you only contact forwarders who are able legally to ship what you want to ship. Insurance is always a good idea, but even more so if you know that your shipment will undergo specific risks, such as piracy.  In these cases, it is important to know that your freight forwarder’s insurance includes protection against these specific risks.

What to Look For: Experience Counts

As you research and compare freight forwarders, note the company’s experience.  Experience is one of the most significant differentiating factors, and a company with higher level experience will be best for you. More experience tends to mean larger networks, which are essential for freight forwarders. More experience also means that the forwarder has, for the most part, been able to deal with many problems over their tenure of existence and should be better equipped to deal with future problems. Freight forwarders that have been around for a while are also much more likely to be registered with all the necessary government agencies; however, you should always ask if they are licensed with all necessary air and sea transport agencies in whichever country you are operating.

If you have a fairly common product, then depth of experience does not matter as much, but if your product is unique, this is very important. For those with unique products, a freight forwarder with unique experience is preferred to one with more general experience, even if the forwarder with general experience has been around for a long time compared to the freight forwarder with unique experience with your product. However,  if a forwarder with general experience has been around for a massively long amount of time then it can probably be trusted to handle your unique product, but you should always ask. Steer clear of specialty freight forwarders whose specialties are with products that you don’t need to ship.

Comparing Prices

Comparing prices may seem like an obvious thing to do when obtaining any service or product for your business, but when it comes to freight forwarders it is not as straightforward as in purchasing goods. When comparing freight forwarders on price, the first step is to eliminate those who do not offer all the services that you will need. While some of these options may be cheaper, it is not worth it to contract with a freight forwarder that will not be able to get the job done. Once you have narrowed down your list to those freight forwarders that have all the characteristics you want, it may be tempting to simply choose the lowest list price and move on, but it is essential that you do not do that.

Freight forwarder’s pricing systems vary enormously and it is extremely important that you understand the systems of the forwarders that you are considering. Before I get into the nitty-gritty of pricing, a good rule of thumb is that if the forwarder is not trying to get you the lowest price possible, while maintaining quality service, then they are not doing their job. The biggest factor in comparing prices for freight forwarders is how they treat different volumes of product, and how this affects you. Many freight forwarders will offer a volume discount to encourage businesses to ship more product with them. If a forwarder you are looking into offers this kind of pricing, then you should make sure that whatever price they have posted will apply to the amount that you plan on shipping. In addition, if you plan on shipping varied amounts of product through the same freight forwarder over time then you should make sure you know how this affects the price. You should also be sure to know what their base price covers: some forwarders will include many of the fees that you need to pay in their base price, and others will add it on later. It is important to make sure that when you are doing your own price comparison between freight forwarder companies, you know what they each will cost after all fees are applied.

Questions To Ask Your Freight Forwarder

Some general paths of inquiry for freight forwarders have already been covered, but it is useful to have a list of questions that you can ask word-for-word, so here is that list.

About experience:

– How many years have you been in business?
– How much experience do you have with my specific type of cargo?
– How large is your network?
– What government licenses do you have?
– How is your network in my country?
– What accreditations do you have?
– How large is your staff?
– Will you bring in any partners to help you deliver my shipment?
– What are the names of any partners that you are bringing in?

About Pricing:

– What is included in your rate?
– Do you have a volume discount, if so, how does it work?
– How often do your rates change?
– Do I have to make a commitment to you to get your best rates?
– How much do you charge for preparing documents?
– How much is insurance, and what does it protect me from?
– Can I eliminate services that I don’t need for a price reduction?
– How quickly can you give me a quote?
– What costs will there be at the destination?

About Logistics

– Can I track my product?
– What customs requirements should I know about?
– Do you offer shipping for my product at the volume that I want to ship it?
– Will I have to handle the paperwork?
– Do you specialize in certain products?
– What information do you need me to provide?
– How will you communicate with me?
– How often will you communicate with me?
– What do you need from me?

While all of these questions are important, none of them can be the end all, be all. It is very important to ask follow-up questions and learn everything that you can about your freight forwarder. After all, you are trusting them with the product that will drive your business! To that end, one of the best questions to ask a freight forwarder is simply, “Why should I trust my business to you?”

Reputable Freight Forwarders

One of the best ways to ensure that your freight forwarder is experienced, good at their job, and offers fair prices is that they have a good reputation among their other clients, and also serve many clients. WaystoCap has knowledgeable human resources with more than 20 years of experience in the import-export industry. Our team developed a rich address book that allows it to access most of the reputable freight companies in the world and negotiate very competitive prices for our clients. This is one of the added value that WaystoCap Logistics offers in the African market compared to competitors. These are some of the companies that we do business with:

Armstrong and Associates is a third party logistics company that ranks the top freight forwarders in the world each year by gross revenue, TEUs shipped on the oceans, and metric tons shipped by air. According to A&A, DHL Supply Chain and Global Forwarding were tied for being the top freight forwarders in the world in 2017, with $27,598,000,000 USD in gross revenue after shipping 3,259,000 TEUs over the oceans, and 2,248,000 metric tons via the air. DHL was tied with Kuehne + Nagel, who did $22,574,000,000 USD in gross revenue with 4,355,000 TEUs shipped by sea and 1,570,000 metric tons by air. While you don’t necessarily need the best freight forwarder in the world in order to get the job done, the size of the forwarder should definitely be a concern. You should also be thinking about how your product will be shipped – by air or sea – because most companies are more prolific at one than the other. For instance, Sinotrans Limited ships 3,360,300 TEUs by sea compared with just 533,300 metric tons by air.

How WaystoCap Can Help You Choose A Freight Forwarder

WaystoCap is a platform that supports importers and exporters in Africa by providing experienced, comprehensive consulting and referrals to entrepreneurs. WaystoCap is the first B2B marketplace in Africa dedicated to international trade, and makes available a dedicated, in-house team which boasts many years of experience in international trade.

We are experts in the African market, which means we know and understand local laws, regulations, and trends in various industries. WaystoCap has created a unique opportunity for Africans to build community by trading with other African and international enterprises.

WaystoCap ensures smooth international transactions by providing assistance in a variety of areas from shipping practices to evaluating product quality, and securing insurance for your imports and exports. Our platform creates access to the highest quality products, vetted businesses, and to the most affordable goods available for trade on the African continent. By using our platform to research prices, find business partners, and source quality products, you will save time and money – which means you’ll have more time and money to spend on your business!


SOURCES:


Universal Cargo
Shipit
iContainers
John Good Shipping
Logistics Management
Shipping Solutions
Armstrong & Associates

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