What Type of Freight Forwarder Is Right for You?
Not all international freight forwarding providers are the same. For example, some freight forwarders are focused on offering the lowest prices. Other freight forwarders tout their technology above all else. Then there are freight forwarders that prioritize overall customer service by personalizing the approach to your supply chain.
Determining which freight forwarder is right for your business model means looking at the advantages and disadvantages of each type of logistics partner and how they will impact your business. It’s important to look at your company’s priorities and find a match that will add the most value in those areas.
Here are several things to consider when choosing a freight forwarder:
Low-Price Leaders: One Advantage, Many Disadvantages.
Low Cost: The biggest advantage of this type of freight forwarder is right in the name: the low prices. They have low labor and overhead costs and pass those savings onto you. However, when it comes to customer service or tracking technology, you may find them lacking.
Lack of Support: Due to their low overhead, these type of freight forwarders often don’t invest in customer support. Since many of these providers are based overseas, there can be a significant language barrier. This issue can become a problem if you need to ask urgent questions about your shipment or solve a problem. Don’t forget the time zone differences either — if your freight forwarder is based in China, they can be 12 to 18 hours ahead, depending on where in the U.S. your business is headquartered.
Another drawback with these type of freight forwarders is they often only specialize in one specific trade lane, the transpacific for example. Your shipments from Europe or South America may be beyond their scope of service. Also, they may only offer ocean freight services, which means if you need air or domestic freight shipping services, you will have to work with another vendor. The inefficiency of using additional vendors easily negates the money you will save on shipping.
As the old adage goes, “you get what you pay for.” While this type of freight forwarder has some significant disadvantages, that does not mean they will not be a good fit for your business. If you only import goods a few times a year and don’t need extra support, a “low-price leader” may be a good fit for your business.
The Technology-Focused Freight Forwarder: Pros and Cons
Streamlined service: Technology-based freight forwarders offer a more streamlined service that many customers expect today. This type of service may also take the form of an online marketplace of different providers (à la Expedia). These freight forwarders rely on online portals to let customers quickly provide quotes and book shipments. They also provide tracking tools, so an importer knows where their goods are at any point in the shipping process. For an importer who wants information about their shipment quickly, these technology-based services often provide great visibility.
One Size Fits All: Unfortunately, technology cannot solve all problems. The main disadvantage of technology-based freight forwarders is that they have a one-size-fits-all business model and typically are meant for simple shipping needs. The more complex your shipments are, the harder it is for a technology-based freight forwarder to provide the best service for you. For example, if you need warehouse storage and domestic freight, this type of freight forwarder may not offer a way to coordinate easily with additional vendors. That means more work on your part communicating between your freight forwarder and other vendors.
If you have a problem with a shipment, it can be difficult to get the support you need. Since many of these technology-based freight forwarders rely on automation, that means they may not know much about your company beyond what is on the computer screen. They will not be in the best position to recommend better routes or provide information on times to ship to avoid peak seasons or local congestion issues. Designed for simple shipping needs, their system may not be sophisticated enough to solve more complex problems.
Much like the low-price leaders, if you have only a few shipments a year or don’t have complex shipping requirements, technology-based freight forwarders can be a good fit for your company. If you have anything more complex, however, you should look to the freight forwarder that has a consultative approach.
Consultative-Based Freight Forwarder: Many Advantages, One Drawback
Customer Service Focus, Value-Added Services: This type of international freight forwarders are all about service. They focus on becoming a partner to an importer, so they can serve as the logistical arm of the company. The customer service focused freight forwarder is best for an importer that has complex shipments or wants to know the best way to ship their goods.
These freight forwarders typically have considerable experience with coordinating complex shipments and have built relationships with carriers and other vendors to help keep shipments moving, even in the most difficult situations. This network includes other vendors too, such as warehouse providers, domestic and air freight services, and customs brokers. Their network allows them to coordinate every aspect of the shipment process from start to finish by working with their partners, instead of an importer having to find those vendors and tracking it all on their own.
If you find the right partner, technology can also be an asset for these types of freight forwarders. Their tracking and reporting capabilities can be tailored to your specific needs.
Service With A Cost: The biggest disadvantage of these freight forwarders: the cost. They are often costlier than the “low price leader,” due to the additional support they offer. However, for an importer considering overall value, it is often a wise investment. This investment pays off with your freight forwarder ensuring compliance and being there to help resolve any problems and delays.
Each freight forwarder has its pros and cons, and which one you choose largely depends on your business needs. No matter what your shipment needs are, rest assured: There is a freight forwarder out there for you.