Category Archives: Forwarding processes

Freight quote – the elements

Very often on the phone or via e-mail I receives requests like “How much it will cost me to move a load from USA or China to Bulgaria”.  Literally !  Well, I would gladly quote them but I can’t. Neither will any other forwarder.  For the simple reason that the rate request is incomplete and provides no information that can help to make a proper price calculation.

Actually, the international transportation, though not a rocket science, is pretty complicated  process or set of processes and activities involving various participants, environments and regulations. That is why when requesting a rate it is highly recommendable that basic load information is provided from the very beginning in order to avoid clarification calls and mails – which is a simple waste of time.

Below we will list the main elements which your rate request should contain in order to get a proper proposal for transportation which to be backed by the opportunities to do the job. This will help you to make your cost calculation much more precise.

Address of loading/unloading:
For USA, Canada and EU countries it is enough to point out name of the city /town and the post/ZIP code and the country. But in order to get inland cost calculation for counties from South East Asia or India you should provide the complete address.Be precise!

Terms of delivery:
one of the most important and one of the most omitted elements. That is why we will discuss it in details in our next post. Here I would like to accent that providing the terms of delivery – FOB, EXW, DAP is great information for the forwarder as they will know what cost elements to include in the calculation.

Gross weight and package dimensions:
I have received many rate requests which contain only the gross weight of the shipment.  Or only the gross weight and the volume of the shipment. Well sometimes it is not enough especially when airfreight quote is needed. In airfreight there are certain limitations on the single unit dimensions and gross weight and this limitations vary from airplane to airplane. That’s why especially when you have packing different from typical cartons packaging – get as accurate dimensions per package as possible. This can save you very unpleasant surprises with cargo on-hold or rejected just because it can not physically fit into the cargo bay of the plane or container.

Description of goods:
I can never understand customers who are unwilling to disclose what is the commodity they want transported. If this is a secret – then do not use forwarder – call the mob for example they are good in keeping secrets. But if you need a good rate which considers your commodity – just advise it to the forwarder.  The shipping lines and airlines have specific rates for specific commodities.  So better this to be known from the beginning. For example – flashlights with batteries can be a pain unless you have advised in advance that the flashlights are with  batteries.

Insurance
We will discuss this in additional post but here I would like to accent that unless you explicitly ask for cargo insurance you will not be quoted one.  Why? Very easy – transportation is different activity from the cargo insurance and being not mandatory forwarders do not quote unless asked. But my recommendation is – ALWAYS ASK FOR INSURANCE.  Might increase your cost but not with much and makes your sleep undisturbed.

Goods value:
For most of the shipments goods value is related mostly to the cost of the cargo insurance. But for some specific goods like valuables providing goods value is a must.  Also it is good to know it as in some countries it is part of the calculation of the customs bond, duties and taxes.

Specific terms of transportation:
Keeping certain conditions in transportation of certain commodities might be crucial to the goods themselves. If you ship vaccines for example maintaining the the narrow temperature range is mandatory in order to have vaccines transported without destroying them. So – know and request any specific ways of transportation if different from the normally accepted for the certain carriage. For example if you move ocean freight know that the containers move in a high humidity environment with very wide temperature ranges.

In order to make your life easier the forwarding and logistics provider KG CARGO has developed a rate request forms for airfreight, ocean freight and road freight rate requests which can lead you in the process.

For more information on KG CARGO freight forwarding service please contact us.

Beware prepaid freight and shipments from China

Recently, I have joined an interesting discussion in LinkedIn concerning the “Chinese system of prepaid LCL Shipments”

I am sure the majority of you have experience with this system which cannot be called Chinese at all because it is also applied in India and all over the world where there is no transparency of cost.

Regrettably none of the participants of the discussion has spoken about one very important point.

Chinese freight market is in principle FOB market – which means driven by the consignees not the shippers.

Normally the deals in China are made on FOB terms.  If any other terms of delivery are used – be careful.

If the Chinese supplier provides you and EXW rate for the products that they want to export that, in most of the cases, means that they do not have proper export license so when it comes to the export you need to “buy” such a license – which cost between 100-200 dollars.  This is the easier part because normally the consignee gets the proposal from their forwarder and knows in front all the costs involved – from warehouse where the goods are loaded up to the warehouse where the goods need to be finally delivered.

The difficulties come with the CPT, CIF, C&F quotations.  Than the buyer must be very aware of all the costs related to the delivery of the freight to them.  And here the system of hidden costs come in full power.  Chinese shipper goes to the forwarder and negotiates with them a very low rate – FCL, LCL, air – no matter the system is the same.  This rate is under priced – 15 usd w/m obviously can not cover the cost of LCL filled 40′ container and is very very low rate which does not cover the service.  The rate is normally to port or CFS and – now beware – “all local costs are for the account of consignee” The moment the buyer sees such a definition they should know that most probably the overall cost for getting the goods to their warehouse will be twice as high as the cost if the shipment has been moved FOB. Unless, the buyer has a clear quotation from his Chinese colleagues on DDU charges – my recommendation is – do not buy that “cheap” rate.  Because it is not “cheap” at all.

Rarely, it appears, and we should admit this, that the shipper and consignee have agreed to split the transportation terms – this is done only between longterm partners who trust each other and who know – both sides – how much the cost is from door-to-door.  But this situation has nothing to do with the unethical system of hidden costs.

How to avoid it.  It is simple. Whenever you buy from China and India – never ask local forwarders for a quotation. Turn to a forwarder at your end and ask for proposal which includes not only the ocean freight or airfreight cost to the nearest destination port or airport. Ask them to quote you to your door. Then you will  have a clear picture of what how much the delivery of the purchased goods costs.

For shipments into Bulgaria please do not hesitate to contact us for a airfreight  price or ocean freight quotation.

For more information on KG CARGO freight forwarding service please contact us.

Courier or freight forwarder ?

What is the difference between freight forwarder and a courier?  I have been often asked that question. Well, from operational point of view the difference is tremendous but from customers point of view the difference is none. Why?

The customer perception is that both couriers and forwarders offer the same service – delivery of shipments from one point to another. And this is really the case. But the courier does it one way and the forwarder does it in another.

Normally couriers supply door-to-door services and they operate in their own systems or connect to specially organized systems.  This networks, are integrated and in-separable as processes. That is why couriers are often called integrators.
Once your shipment gets in this network it is delivered to the address shown on the airwaybill and the customer has no control on it. This appears to be very economic and efficient way for smaller shipments because there is no accumulation of all minimum rates which the forwarder should charge if the same service is offered through forwarder. Actually for small shipments, couriers benefit from the change of fixed cost involved into variable – per kilo or per shipment cost.
This is one of the reasons why couriers have tarrifs which show cost country to country.

From the other side, if your shipment is relatively big the courier networks are not suitable because then the variable costs involved become higher compared to the cost which forwarder calculates for separate shipment. Also if customer’s terms of trade are different from CIF, DDU or EXW than the couriers are unable to separate which at the end in practice changes the delivery terms. If you have sold small commercial shipment on terms of delivery FOB Sofia airport and have moved it with a courier from Sofia to Sao Paolo for example in practice you cannot split the cost from your warehouse to the airport through which the courier operates (it might be not Sofia) and which is more important you cannot split the liabilities caused from the terms of delivery.

Here we have the forwarders involved. The forwarder will consider your specific shipment with its specific parameters – weight, commodity, dimensions, stackability, customs value etc. and will move it in the most appropriate way taking in consideration all of the peculiarities of your freight.  Forwarder can build you routing or package of interrelated services which will respond to customer’s terms of sale and if the shipment is bigger forwarder will offer the benefits of moving bigger shipment on specially dedicated routing for this particular shipment.

This way of operations is reflected in the way forwarders provide their rates – per kilo, per weight break per CBM very often quoting the taxes for handling, customs processing etc.

So from one side we have couriers, with their integrated but also encapsulated networks – effective for smaller parcels and expensive for bigger and from the other side we have freight forwarders with their flexible systems – more expensive for smaller shipments but providing flexibility for bigger or special freights (like hazardous material for example)

Whom to choose?  Here is a short advise which may assist you when you take decision.

If you have shipments which is considered as general cargo and weights less than 10 kilos – couriers in 90% of cases will provide more effective service.  If you do not have special requirements for delivery to the final destination, if your shipments is not valuable, if your shipment is not considered dangerous goods – with few exceptions – yes, take the courier.

However if your have some specifics in the terms of delivery, your shipments is considered hazmat, or it weights more than 20 kilos. If you want some one to make very special delivery outside the operational window of the courier or if you are moving valuables or live animals – than forwarders are your choice.

In order to satisfy this wide range of requirements and specifics we in KG CARGO have special contracts not only with leading air and ocean carriers but we have good relations with couriers like DHL such being able to satisfy often contradicting requirements of our customers and partners providing the benefits of the two approaches – the courier and the forwarder’s

The Bulgarian freight forwarding company KG CARGO considers any and each of your requirements for reliable delivery on acceptable cost and tranzit time.  If you want to ship a load from Bulgaria or if you want your loads into Bulgaria properly handled please contact us and we will come with  a solution to you.

You can also use our special air freight transportation rate request form which is designed in a way to lead you in the process of providing proper information for your intended shipments which results in better prices and more appropriate handling and routing.

For more information on KG CARGO freight forwarding service please contact us.

Selling Freight Forwarding Services

2 months ago I have posted the article Converting sales lead to order – forwarders tale. In this post I have tried to attract the attention of the forwarding community to an important but highly undervalued process. The process of sales.  As any process the process of sales has an input which has to generate a result. But what we provide as an input in freight forwarding, how we manipulate this input in order to get the desired result and what result do we get at all (is it the desired result?).

Firstly, I would like to accent on an important point. The sales process starts from the end of the marketing process. It is the sales lead and the cold call that are the inputs of the sales process. Now, let us take a short look at the freight forwarding sales process. I see three steps which I put in form of questions.

Question number one: What we sell? Freight – no definitely not as we do not own the freight, transportation – again wrong answer, we do not provide transportation services (we are forwarders not carriers). You might be laughing for saying obvious things but belive me my practice thought me that they are not obvious at all and many salespersons tell to their customers they sell freight or transportation. Actually as forwarders we sell – organization, coordination, consolidation of various services which aim at the proper movement of our customer’s freight from one location to another. That is it. This is what we do. This is what we sell. Organization, coordination, consolidation !!

Question number two: How we sell? Normally, most of the salespersons, being eager to close the deal start by overwhelming the prospect with information about the organization and the products they can offer. This is very wrong approach, I can say it from bitter personal experience.  Firstly what we need to know is what is actually our customer looking at. What kind of transportation they use, how they perceive such vague notions as “short tranzit time” and “low freight cost”, what is their understanding of the “quality forwarding services”. And this we can find out only by listening and asking the right questions. We should understand that selling freight forwarding services is not like selling “sneakers”. You can not impress the prospects by telling them how good is it for them to ship using your services 100 kilos from New York to Sofia, Bulgaria if they do not have the need to ship. This is the starting point. Unlike foodstuff for example, our customers must have loads in hand in order to look for our services at all. On my practice I have this case when I spent 30 minutes explaining what opportunities my company had just before realizing that the prospect does not have international shipments at all. So the starting point is: either start selling with a sales lead or do your homework before making the cold call. There are many books on this topic that is why I will not go there. But I would like only to share with you what became one of my foundations in selling freight forwarding services – Does my prospect have any international loads at all !?!  Only the positive answer to this question will put the prospect in my list.

Question number three: When we stop the sell ?  This is easy. We stop selling in two cases. Either prospect tells you – “We are not interested in your services” or they give you an order.  Many of you might object to the last but it is my understanding that after you receive your first order you should start serving your customer in order to get repeated orders which is different process from sales (though closely related to it).

Whether you agree with me or not – please comment or remain silent!
If you have other views on selling freight forwarding services – share your comments with us!
Want to tell us more about selling process in freight forwarding – this is the place to do it!

For more information on KG CARGO freight forwarding service please contact us.

Converting sales lead to order – forwarders tale

Once upon a time there lived a forwarder who was acknowledged as a very good designer of the shipping process. The name of the forwarder was Sef and he has owned a small company working alone from home. His company was SSF – Small Size Forwarder – do you remember). What helped Sef in his daily work was his integrated CRM/OMS where Sef entered all necessary information for his suspects, prospects and customers.

One day Sef found that company ABC is a company that has international customers which means that they export their products and most probably use forwarding services.  After fast research and several cold calls Sef has found the name of the person responsible for the logistics operations – Lamia and her phone number. Being pretty clever and professionally sound person Sef has entered the whole information about ABC and Lamia as a lead in his CRM system.

Afterwards, Sef called Lamia and asked her whether he can send a short presentation of his company and after receiving her positive answer he just pushed a button at his computer and his CRM tool has delivered to Lamia the presentation. This was a short, straightforward presentation which only by its style, wording and formating has convinced Lamia that on the other side there is a reliable professional who might do the job. Sef of course called her after a while just to find whether she has received the presentation and whether she is still interested. And the answer was positive again. Lamia told him that now Sef’s company is in her list of the freight forwarders to whom she turns when she makes rate requests.  Sef was content. Another step has been made. With this answer ABC company is no longer suspect in Sef’s CRM, now ABC became a prospect which need special attention and approach.

Only a week later Sef has received a call from Lamia. She inquired him whether he can arrange a special delivery of a machine which is crated in 1 wooden case with dimensions 230 cm/300 cm / 225 cm and weighted 4330 kilos. This machine should have been pick-up in Plovdiv, Bulgaria and delivered to Port-Au-Prince in Haiti. And the delivery must be done within 15 days.

Sef, found the deal very challenging because ocean transportation was not the case due to long transit time and there are no wide-bodied aircrafts moving from Bulgaria and landing at Haiti. But that is why Sef was acknowledged as a designer of the supply pipeline.  He realized that if the freight is trucked down to Brussels from where loaded to a freighter to Cincinati from where trucked down to Miami where staffed in a container and shipped on the way to Port-Au-Prince it is possible to make the requested tranzit time. Once the routing was ready, Sef calculated all possible cost which would accrue during the shipping process having a long correspondence and phone calls with his colleagues in Brussels, Cincinati and Miami. At the end being ready with the cost and proposal – Sef has keyed all necessary info into his CRM, converting the lead to an opportunity and generating a quotation right from the system.  And again with just a push of a button he has sent the quotation to Lamia.

Once Lamia received the quotation she was impressed from two things – firstly Sef was the only one that has provided a solution to her exact requirements. Secondly the proposal was affordable and within the budged she has planned for the movement of this freight.  After short thought she decided to move with Sef and placed to him an order.

Receiving the order Sef immediately registered it in his order processing system by simply converting the quotation to sales order at his CRM. This automatically has also changed the status of ABC from prospect to a customer.

This forwarders tale have described the marketing process of generating the lead, which has been converted to an opportunity and triggered the sales process of converting the opportunity through quotation to sales order.

How Sef has processed and managed this order you will find in our next post.

Any comments are welcome.
Any leads and sales orders are more than welcome.

For more information on KG CARGO freight forwarding service please contact us.