How to choose a freight forwarder? On the face of it, it would seem pretty simple. But in my experience, those who embark on the process of buying product from overseas can find it a bit of a challenge to select the right freight forwarder and customs broker for their business. In many instances the intricacies of the logistics and supply chain process is not a core skill.
In general, as an importer you will – rightly – devote most of your attention to sourcing the right product, negotiating with overseas suppliers, obtaining product samples by international courier and/or visiting the overseas supplier abroad to meet with product managers, visit and inspect their site, quality control and obtaining an understanding of their manufacturing process.
When the overseas supplier assures you that they have their own forwarding agent with whom they regularly ship on a CFR (Cost of Goods and Freight) basis the challenge of the supply chain process and selecting a forwarding agent may seem to be alleviated.
So, job done – right? Couldn’t be simpler to have the supplier handle the exporting too. While this might seem like a big relief and a streamlining of a seemingly cumbersome process, there are often services and deals to be had by working with an Australian based freight forwarder and customs agent for two main reasons:
- The overseas supplier will book with their preferred agent, usually not to meet the needs of the importer, but to suit their own,
- CFR (Cost of Goods and Freight) is not the end of the story and often by the time the importers receive the invoice from the local receiving agent in Australia, a lot of unnecessary cost has been incurred which is often be due to the supplier’s handling of the negotiation. This is especially prevalent with LCL (Less than Container Load) cargo where, a whole system of rebates between the load port forwarding agent and the destination port forwarding agent are available.
How to choose a freight forwarder checklist:
- Find your own freight forwarder and import on an FOB (Free on Board) basis to ensure control of costs, visibility and flexibility.
- Understand and extrapolate what it is you really want and what your logistics needs are now and in the future. Ask the appropriate questions to qualify your freight forwarder candidate.
- Select a forwarder who specialises in the market or industry you participate in. For instance, if you are importing clothing or footwear, find a forwarder that specialises in this. There are a number of players in the marketplace that specialise in apparel logistics – large, medium and boutique. It can be a good idea to match your business size relative to your industry to that of your forwarder. For example, if you are a medium sized or boutique business you will have specific needs and may require a bespoke service to meet them. Forwarders that serve a niche market tend to be more agile, flexible and adapt quickly to sudden changes to your freight requirements.
- Pricing is important and it is imperative to not leave your money on the table, it is also important to find a forwarder that has good systems and processes and a good reputation amongst your peers. Your industry networks and social media can help you find a reputable company.
- Ensure you understand what you will pay for your consignment and beware of extra or hidden costs.
- Seek full transparency and integrity from your forwarder.
- Choose a forwarder with an appropriate reporting or tracking system for visibility.
- And finally, many forwarders in Australia have a wealth of knowledge about your origin country and markets and in many instances can provide you with the benefit of this to save you time, money and anxiety at all stages of the importing process.
If you would like a confidential discussion about your importing and freight forwarding needs please call Edi Lenkic on 1300 651 888, or if you’re in New Zealand call Paul Knight (09) 974 4818. Alternatively visit www.magellanlogistics.com.au for more information.