Tag Archives: freight forwarding

Converting shipping cost to a single unit

The reason to write this article was a discussion in LinkedIn initiated by young internship Umamaheshwaran Sundaram who is looking to ways to convert and start providing quotes to a customer per ton. I should admit that similar attempts I have been trying since I have started in the freight forwarding – regrettably so far without huge success.

Why?

Freight forwarding by itself is an activity of coordinating and managing transportation of goods from their origin to their destination, encompassing many activities provided by various suppliers.

Imagine simple 1 CBM movement of LCL cargo from India to Bulgaria. Firstly you need to pick-up the goods somewhere in India – which is pretty big country. SO you need to higher a haulier – how this haulier will quote – per ton, per shipment, per truck or per CBM. Then your freight arrives in a warehouse – which might be your warehouse or warehouse of your co-loader, ord partner or directly the NVOCC. ANother cost or set of costs accrues here – warehousing charges – how they will be charged per CBM, W/M, tone or per shipment. In the warehouse your shipment will be staffed in an LCL container and moved to the port of origin – another set of costs billed per various units is generated etc. etc.

So in order to convert to single measuring unit, the one should consider too many factors you need to consider:

– projected loading of the container
– ratio volume to gross weight
– average number of shipments per one container
– average gross weight per shpt
– average volume per shipment

In todays  unstable market situation this is only possible to already established NVOCC or air carriers (even they face problems with calculating their cost).

So it is better to provide customers with list of cost for certain services and when it is per particular shipment to quote them exactly for that same shipment. I would be upset if customer knocks on my door and requests from me a quotation in single unit. And if they insist on this then I would insist that this unit is per shipment.

Only then both me and my customer will be satisfied.

KG CARGO is a Bulgarian freight forwarder who provides transportation and logistics services to and from Bulgaria.

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.