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.

Do forwarders understand their customers?

Recently I have read report published by Eyerfortransport which has been researching through various aspects of the relations between shippers and forwarders. As the link to the report download is not working anymore, I take the liberty to provide link for downloading the report here.

I would like to focus here at only one of the graphics – The Key Reasons Why Shippers do not renew Existing 3PL contracts.

Below please find a table which I have extracted from the diagram which is provided at page 15 of the report, which you can download from here.

Reasons Shipper 3PL
1 Cost creep 1 8
2 Poor Service 2 2
3 Alternative 3PL provides better service 3 5
4 Hidden cost 4 9
5 Alternative 3PL provides lower cost 5 1
6 Relationships management issues 6 3
7 Inefficient management by 3PL 7 4
8 Loss of logistics innovation capacity 8 10
9 Clashing firm cultures 9 11
10 Unrealistics expectations of 3PL from customer 10 6
11 Too high dependence from 3PL 11 12
12 Problems at evaluating the 3PL performance 12 7
13 Loss of control over 3PL 13 13
14 Latent Information assymetry 14 14

What impressed me most is the gap in perception for reasons for the shippers and forwarders.

In the first row we see that for the shipper the main reason for discontinuing 3PL contract is the Cost creep, where for the forwarders this is of less importance and they have rated this at 8th place. Strange isn’t it. Regretably the report does not deepens in how the shippers see cost creep. Sometimes they see the increase of the fuel surcharge and BAF  and involvement of Peak Season Surcharges as something which is done with only idea to have the shipper’s money staken without understanding the reasons for the increase – often being correct that there is no reason at all.

The other big gap is how shippers and forwarders see the Hidden costs. Shippers put it 4  place where for forwarders it goes on 9 place which is not a surprise knowing how many forwarders still practice this “techniques” especially from China to  Europe. I am personally have lost many deals because it has been difficult form me to explain to customers why the transparent prices are much better and at the end more effective as they give you clear picture on the transportation cost related to the “lower” hidden costs which you never know how much they are. I am sick of this practice, and as I see the shippers are sick as well. Why forwarders do not understand this – I do not know – do you ?!

Third big difference between the customers and forwarders is my favorite. The price issue. It appeared that from forwarers prospective customers are looking for nothing else but lower and lower prices. And here come some players that start pushing market down covering behind the slogan of – “agressive selling rates”. I hate this. It is strange how we forwarders detiriorate our own market and this is without push from the customers, because for them the price issue is graded at just 5th place.

Please look at the table and think on what is behind the figures. May this will help us to understand our customers better.  Any comments are welcome.

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.

Marketing and Sales funnel in the freight forwarding

In previous post we have walked together with Sef through the whole marketing and sales process in freight forwarding. There are many articles about marketing and sales but only few if I can remember about marketing and sales in freight forwarding.  That is why I would like to deepen more on this. And I expect that you – my fellow forwarders – will help me to go even deeper.

I would start with the Marketing and Sales funnel. The concept of the funnel is simple and great one. The funnel visualizes very well the main milestones in this process which eventually ends with the sales orders. There are many pictures of the funnel but I have chosen these two which represent it from different point of view:

AIDA sales funnel

AIDA Sales Funnel

AIDA funnel shows the process with its 4 milestones – step by step. We create awareness about our company and our services,  awareness generates interest in what we can offer to the customer, interest is accumulates desire to buy our products and desire evolves into action – which is buying transportation services. And which actually triggers another process – sales order processing.  AIDA describes the sales process on conceptual level. Here I would like to make an important note – actually the D in AIDA should be changed to N for Need.  Because my dear friends, we are in a market of satisfying needs not desires.  I do not know anyone who is longing to send 100 kilos from Los Angeles to Brussels just for the sake of shipping. And if I eventually knew this person would have been object of a medical article rather then of forwarding one. Never forget this – We are in a market of needs.

Sales Funnel Diagram

Sales Funnel LOQO

LOQO  funnel (from Leads, Opportunities, Quotes, Orders) is a reflection of the AIDA  funnel in terms of results. It reflects it from the CRM point of view.  The awareness is expresses in leads, the interest is represented by opportunities, quotes show the desire and sales order indicates the action.

The environment that transforms the conceptual ideas of AIDA into practical terms of LOQO is the CRM.  CRM not as IT term but as a management concept that helps us to streamline and control the relationships we build with our customers.  Before you start looking for CRM in IT terms understand the CRM as a concept. I plan to make special post or series of posts about CRM sharing my experience. Here I would like to concentrate more on the Marketing and Sales process represented by the Marketing and Sales funnel.

Here I would just outline the phases/stages and I plan to dedicate special post to each stage.

Awareness is the first stage of the funnel and is 100% related to the marketing activities of the company. People buy from people and companies they know. This is the bottom line of the Awareness phase of the funnel.  We advertise, we promote, we participate in the buzz, we spread our brand, we research and make lists of names and mails for our mailing campaigns. And all this  with one only purpose – to get people know us and our brand. And the main measurement of whether we do well is the number of sales leads we generate.

Interest – this is where Marketing passes the baton to the sales. Using our professional sales skills we attract the prospects attention by influencing their interest in the freight services OUR COMPANY provides. This is where we take the leads which were generated in the Awareness phase and using various sales techniques we try to turn the leads into potentials or opportunities. The more leads we convert into potentials/opportunities better job we have done in these phase.

Need/Desire – People know us and what we do. They are interested in the transportation and logistics services we provide.  And they need it.  Now what?  We all know what happens here – we receive the rate request, we make the proposal and we fight teeths and fangs to make the proposal successful. To have the SALES ORDER.

Action – and here we come to the last phase. The phase where all our marketing and sales activities we have made in the previous phases made our customer to take action.  Finally we succeeded to convert the quotation to order or if we go further to convert the sales lead into order.  The action phase however is not the end. The Action phase triggers another important process – the Order management process. But there is a long way to it. Way which we can walk together.

If you like the article – share it !

If you disagree with it – argue me !

If you have your own ideas and experiences – comment and share with us !

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.

The Resources of Small Size Forwarders

I would like to continue the topic about the small sized forwarders.  We all agree that the SME forwarders are more flexible than the bigger forwarding companies however they lack the resources and the buying power of the bigger forwarders. But is this the real case.

Should the SSF maintain a warehouse?

Should the SSF pay huge ammont for CRM and Order processing systems ?

Should the SSF pay huge software license fees for Microsoft products?

Should the SSF maintain huge employees department in order to have dedicated employees for various activities – like customs brokerage, inland deliveries, airfreight operations etc. ?

NO, NO and NO !!!

Believe it or not but a clever designing and planning of operations can compensate for the lack of various resources.

Here you are several advises and examples:

Bonded Warehouse

I am sure that all of you know what is the price to establish and maintain warehouse operations. In Bulgaria for example if you want to establish and maintain  the smallest bonded warehouse – for example to handle your inbound airfreight traffic you need to plan at least 60 000 eur annually – this is the smallest ammount. And it is a fixed cost. That means that whether you have traffic or not you are to plan these funds. But here comes the trick with the transformation of the fixed costs to variable cost. How, very easy – outsource this activity to a company which operates such a warehouse and which is relatively neutral.  Doing so you will pay only on a per shipment basis which makes you very flexible and competitive.

Customs brokerage department

In order to maintain a steady and smooth customs brokerage for your customers you would need to hire at least two customs brokers who know very well the procedures and daily follow the changes in this dynamic matter. I leave to you to calculate how much this costs – for salaries, social and medical insurances, training, hardware and software and other equipment. And you never know how long these employees will work for you.

If you sub-contract this specialized activity to several highly seasoned customs brokers you can easily transfer their professional experience into processing of your customers orders. Again on per shipment cost but not per employee cost. And the quality of your service will increase. If you monitor and control the process of course.

You can apply the above approach even to the level that you have a special company to handle your exports – physically at the airport.

Software and hardware

CRM, OMS, ERP etc. all these abbreviations bring the accossiation with payment of high license fees. Yes, correct … but only if you are MS dependend.

My advise – avoid Microsoft products as much as you can. This will save you huge money. Let me give you some examples:

Choice of Operation system – Ubuntu vs Windows –

after I get aquainted to the Ubuntu Linux distribution I should admit that Windows is no more.

Ubuntu is much lighter operatinal system than any MS operational systems (any of MS crap).

Ubuntuworks perfectly even on older hardware (especially on older hardware).

Ubuntu is very stable.

Ubuntu is far more secure than the MS expensive dirt.

and

Ubuntu is FREE. You pay zero for licenses. The only funds you would eventually pay are for the installation and training and this is only if you are not able to do it by yourself.

And Ubuntu comes fully equiped with the last Open Office distribution which I preffer to the heavier and more expensive MS Office.  For e-mail client you have a very wide choice but I recomend you choose between Evolution and Thunderbird.

CRM (Customer Relations Management)

There are many CRM solutions on the market but I will recomend you ZOHO CRM.

This CRM system has very good free version which in many of the cases will do a perfect job for your busines and will automize and streamline your marketing and sales processes. And  if you operations are not very sophisticated even your operational processes.  Though it has been made mostly for the computer services industry, it can be easily accustomed to your needs in freight forwarding.  I am using it and I ready to assist any of you in implementing it in your daily job.

I hope the advises here will work well for you and your business. And I want you to never forget one thing:

Forwarder is a Designer. Never stop to be one !!

Your comments, sharing and recommendations as well as critics are more than welcome !!!

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

Cooperation between Small Forwarders

Mr. Mark J Willis from AFL Ambassador has commented on the post Small Size Forwarders that one of the ways for the SME Forwarders to stay at the market is to unite in some form of consortium.  I would agree to some extend but we should admit that cooperation between businesses is not an easy task.  Though the positive effects of such a cooperation are obvious especially for SME Forwarders, for one reason or another it is very difficult to build partnership in an integrated manner.  What I understand in integrated manner it is that you and your partner work like you are same offices but not two different companies,  sharing the costs, problems and at the end the benefits of course.

And believe me it is not only with two small forwarders. Same is valid when two offices of the same big company work to each other.  And in the bottom line it is – lack of trust.  So the question is actually not How to build successful cooperation but should be – How to build trusted relations.

Here are some ways to cooperate and increase your business.

1. Becoming agent of a big company

One of the ways for a SSF to benefit from wider network, eventually centralized billing system, sales leads generation and additional business generation is to become exclusive or official agent of some of the big guys. This however has its negative sides. Majority of the big guys sees the agents like potential competitors and cooperate with them on an adversary mode. I can share quite an experience here. Well there are also exceptions but they are very few.  At the end the big guys either want to buy the SSF for peanuts or simply enter the already explored and matured market.

2. Join a Forwarder Network.

This is a good approach for a SSF to increase its global reach without loosing its independence.  There are several things, however, which the SME should consider before joining such a network:

* Check the network site and find how reliable the network is.
* Try to assess whether the annual network fee will be justified by the potential business you might generate by joining it
* Find out whether the network can issue their own HBL and HAWB and how members can use this opportunity
* Check whether there are some strict ethic standards
* Check how payment among members is arranged – is it no member to member basis or there is clearance procedure in place.

Checking all this will save you the unpleasant feeling you might experience if you find that you have paid 2500 USD annual fee for a membership in a network where the number of members for certain area is unlimited, you still have to issue your own HAWB and HBL and network can not assist you in a dispute you might run into with another FFN member.

3. Build own partnership network

Another way is for SME to start building up its own network of partners.  Very tough and time consuming process.  But this at the end can benefit you with very good partners – again SSF in their locations – with whom you can start building integrated network based on trust.  The third approach is good one but it is very time consuming. So if you want to have a network build on trust – start it now

4. SEKO approach

I really like it. Connecting independent forwarders under common brand. I think this is the most integral way of cooperation where the strengths of SME forwarder are combined with the strengths big forwarders have.

I would appreciate your input and your comments.

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

The Small Size Freight Forwarders

I am receiving a good deal of news concerning the freight forwarding and logistics. In all this news however, the word is about only the big names in our industry.  Yes, exactly  the guys that boast with their hundreds of millions or billions dollars of annual revenues who handle big traffics for big manufacturers and traders worldwide. I understand this as these big players at the end are the industry leaders. But what about the small sized forwarders. Those with up to 5 employees personnel. Shall we continue underestimate them.

The small size forwarders (SSF) – these guerrillas at the market battlefield, carry more value than you can imagine. Most of the big guys were SSF’s ones. Have you forgotten this. The SSF presents very important part of the freight forwarding market. Well, they are not the market leaders, but very often they are the niche developers. And often niches become markets, sometimes big ones.

But what stops the SSF to become bigger?

SSF’s are so much operationally concentrated that they often forgot to look around and miss the big picture. In order to save money they have cut some important activities like knowledge interchange.

Being on a tight budgets they often neglect the opportunities the new technologies present to them. And for a very stupid reason – the SSF believes that new technologies are available only to the big guys as only the big guys can afford them. Which is absolutely wrong.

The SSF readily accepts new customer orders but rarely makes pro-active efforts in attracting new customers.

I believe that if the SSF succeeds in overcoming the above three issues it will grow to an extend where the big guys must pay them respect.

And to the big forwarders I would say – beware the SSF because they are much more dangerous than your main competitors. The day the SSF realizes how to grow further is the day the big forwarders will loose big market share.

Your comments and discussions on the topic are more than welcome !!

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

Freight Forwarder is a Designer

In nowadays international transportation of goods is a complex activity where many players participate in what the customer sees as one service.

This is where the freight forwarder steps in in the role of an architect of the transportation chain by coordinating, monitoring and managing the set of activities, responsibilities and liabilities which at the end result in successful delivery of customer loads.

Imagine a Bulgarian seller has a contract with buyer in Shanghai for delivery of milk analyzers.  The contract is on CPT Shanghai airport commercial terms which means that the seller is responsible for delivery of the goods to the airport of Shanghai and undertakes all risks untill landing of the goods at the airport. The Seller is based in Pleven some 130 kilometers from the main airport of Bulgaria Sofia and there are no direct flights from Bulgaria to China.

That means that the goods must be delivered to the airport, customs cleared and delivered to the airline for further transportation to Shanghai and the Seller has to contact at least 4 suppliers:

– domestic linehaul carrier – for arranging the pick-up
– customs broker – for customs processing of the freight
– the airline handling agent at the airport – to deliver goods ready for carriage
– the airline cargo office or GSA to arrange the booking of the freight

Well, except for the airline handling and booking the Seller could arrange for local pick-up and customs clearance but in the majority of cases the only thing the Seller should do is to place the order to the Forwarder engaging them with the organization of the whole transportation.  Thus Seller, saves time and respectively money and what is very important – headaches with multi-supplier communication and coordination.

All this together with the risks related to the transportation is transfered to the Forwarder, who accepts the order from the Seller to organize the overall transportation and all accompanying activities.

That was a simple example. Now imagine that you have more complicated moves where goods need to be delivered door-to-door with special customs requirements in destination  etc.

Can the goods owner do this by themselves? I doubt it.
It is the Forwarder who designs the whole chain coordinating and managing various sub-contractor activities and risks. This is what the main role of the forwarder is – Designer of the transportation chain.

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