When shipping internationally, companies are faced with the important decision of whether to work with an international freight forwarder or directly with transportation carriers. While there are distinct benefits of both, it is difficult for many new shippers to gauge the importance of using a broker/freight forwarder to act as their logistics department.
The main benefit for global shippers comes down to flexibility. A shipper is not tied down to a specific carrier for their most popular routes, meaning if the market changes and another carrier offers a better package for the customer, the shipper is able to take full advantage of that rate. Also, when there is a delay or hold at the port, the shipper is able to reroute goods much easier through other ports of loadings and other carriers.
Ocean freight carriers have been operating in an unstable and volatile rate market. Ocean freight rates, in particular, can vary weekly, if not daily. While forecasting becomes easier with a set rate for a duration of a carrier contract, the shipper cannot take advantage of deep dives in price when the carrier’s capacity is low.
Without a carrier contract, shippers are not obligated to give carriers a set number of containers. With a large international freight forwarder, the shipper can take advantage of the high-volume contracts with multiple carriers, keeping the competitive price but gaining flexibility. When a shipper’s cargo is coupled with the entire pool of freight forwarder’s cargo, additional cost savings can be achieved.
When dealing with an international freight forwarder, the shipper can deal with one point of contact to ship goods from door-to-door, instead of just port-to-port. A high amount of cargo insurance claims and Customs holds take place when out of the ocean carrier’s possession, making it necessary for a skilled logistics professional to handle the full on board (FOB) shipment. Additionally, companies prefer to deal with a fewer number of vendors to gain operational efficiency. All operations questions are directed to one point of contact, all billing is centralized and all cargo tracking is done with the international freight forwarder from door-to-door.
What companies in the current market have the budget to hire and train a new department, especially for companies dealing with seasonal commodities? When hiring an international freight forwarder, the shipper is able to rely on the staff and industry knowledge from professionals in the field. Carrier contracts place a higher burden on the shipper’s staff to be aware of all regulations and filing requirements, as well as handling any contingency plans that are needed.
The value-added services an international freight forwarder provides can offer peace of mind for a shipper, namely purchase order tracking mechanisms from port-to-door and credit terms. While many carriers collect fees at origin when the cargo is sailing, a freight forwarder will give additional credit terms for qualifying companies payable only after the freight arrives at destination. Many freight forwarding customers see value in using a supplier credit for merchandise only and then using an international freight forwarder for the cargo to be able to increase the initial supply.
If you have any questions regarding the advantages of international freight forwarding, please call LILLY + Associates International at 305-513-9540. We’d be happy to answer any of your questions.