By Brad Dechter - President of DHX, DGX and DAX
Choosing the right freight forwarder to support your transportation efforts to the next city or the next continent never has been more critical than during the current crippling recession—despite the fact that it may be abating. Selecting the correct forwarder can mean the difference between satisfied customers or unhappy ones; efficient, cost effective distribution of your products or careless, wasteful handling of them. Ultimately, whom you choose either will translate into greater company profitability or an income statement’splattered with red ink.
I speak from experience. After almost thirty years in sitting at conference tables opposite literally dozens of shippers ranging in size from multi-billion dollar corporations to those with a few million in sales, and as diverse as home improvement companies to non-profit organizations, I believe there are distinct parameters which if adhered to, will benefit both the shipper and his transportation agent.
Here are some thoughts on the criteria needed in choosing a freight forwarder, or to use the current transportation speak—logistics provider.
Before even entering into negotiations with the logistics provider sitting across the conference table, analyze your own transportation procedures and determine your requirements. You probably have used forwarders in the past. What was the rationale in using past agents and are these reasons still pertinent?
How many shipments will a new agent be handling? Will they be primarily via ocean, air or truck? For ocean, do your shipments consist primarily of container loads or do they’sail as “break bulk” or heavyweight freight? If by air, will the predominance of your cargo fit into the “bellies” of passenger aircraft or must it travel via more expensive main deck configuration? If your freight moves by truck, is it a full truckload or LTL (less than truckload)? Is your cargo bound for regional, national or international destinations—or a combination of all three? Does your cargo consist mostly of high density or lightweight freight—“bricks” vs. “feathers.”
Don’t leave negotiations solely in the hands of your traffic people, as competent as they may be. Draw upon the knowledge and expertise of other departments in your company; finance, marketing, purchasing and information technology. Also, involve senior management in the negotiations to determine their priorities. Be clear in your own mind what is most important in moving your freight; cost or level of service.
It is important that you make the above’vital determination early on, because your search is really for the right combination of service and cost. You, the shipper, want what I call the best “value equation” linking your company’s current production and distribution activities’either to links in your assembly chain or to your ultimate customers. Too many times I have sat at the negotiation table and listened to different viewpoints and priorities from a potential customer’s traffic group, only to learn two months later that top management had in mind other, different sets of priorities. In order to get the best value for your transportation dollar, you need to know and understand your internal value equation—the best combination of rates and services for your company. Most important, properly communicate these values to your potential service provider.
When requesting a proposal from the forwarder, insist upon clear, precise language when outlining his services. Refuse to accept vague generalities. Be clear as to what your company expects from a potential vendor. The better logistics requirements are defined, the better and more specific the forwarder’s proposal will be.
Learn the forwarder’s physical facilities. Does he possess a network of domestic and international offices? How extensive are they? Are the facilities located in those areas of the US and abroad for both your inbound and outbound shipments? Are