Opinion: Choosing the Right Freight Forwarder
By Bradley Dechter
President
DHX-Dependable Hawaiian Express
This Opinion piece appears in the Nov. 9 print edition of Transport Topics. Click here to subscribe today.
Choosing the right freight forwarder to support your transportation efforts never has been more critical than during the current crippling recession — which may or may not be abating. Your choice of forwarder can mean the difference between satisfied customers and unhappy ones, and between efficient, cost-effective distribution of your products and careless, wasteful handling.
Ultimately, the forwarder you choose will translate into either greater company profitability or an income statement splattered with red ink.
I speak from experience. After almost 30 years of sitting at conference tables opposite shippers ranging in size from multibillion-dollar corporations to those with a few million dollars in sales and as diverse as home-improvement companies and nonprofits, I believe there are distinct parameters, which, if adhered to, will benefit shippers and transportation agents alike.
Here are some thoughts on the criteria for choosing a freight forwarder — or to use current transportation-speak, a logistics provider.
• Pre-negotiations — Begin by analyzing your own transportation procedures and determining your requirements:
You’ve probably used forwarders in the past. What was the rationale for using past agents? Are they still pertinent?
How many trucking shipments would a new agent handle and what would be their nature? Primarily full-load or less-than-truckload? Longhaul or pickup-and-delivery? High-density or lightweight? Bound largely for urban or rural areas, or perhaps a combination of the two?
• Negotiations — Don’t leave negotiations solely in the hands of your traffic people, no matter how competent they are. Draw upon the knowledge and expertise of other departments, such as finance, marketing, purchasing and information technology. Involve senior management in the negotiations to determine their priorities.
Be clear in your own mind whether cost or level of service is the most important factor in moving surface freight — and make these vital determinations early in the process, because your search is really for the right combination of service and cost. You, the shipper, want what I call the best “value equation” in your company’s current production and distribution activities, either to links in your supply chain or to your ultimate customers.
Far too often, I’ve sat at the negotiation table and listened to the varying viewpoints and priorities of a potential customer’s traffic group, only to learn two months later that top management had completely different priorities in mind.
When requesting a proposal from the forwarder, insist upon clear, precise language when the services are outlined. Be clear about what your company expects from a potential vendor. The better your logistics requirements are defined, the better and more specific will be the forwarder’s proposal.
Research the forwarder’s physical facilities. Is there a network of domestic offices? Are facilities located in areas of the United States suitable for both your inbound and outbound shipments? Are these offices owned and operated by the forwarder rather than franchise operations or independent agents?
The quality of the people assigned to your business remains the single most important factor to ensure the success of your cargo program. Does the logistics provider have a skilled, experienced workforce that can move routine shipments in an efficient, hassle-free manner but also can respond to emergencies with cool-headed judgment and decisive action?
Don’t micromanage your forwarder. You are engaging a service provider for its expertise, so trust its judgment.
How many of your forwarder’s personnel will be handling your type of freight? What are their experience levels?
How many will be dealing directly with your company and how many will be support people? Where will they be located?
Do the people principally handling your business have experience and knowledge of your industry? If not, will they be taught your organization’s specifics? How much time will be devoted to your company vs. other shipper customers?
Because most forwarders are non-asset-based, they generally use contract truckers. Who are the forwarder’s preferred truckers? Are they large, well-established carriers or small, marginal trucking firms?
Be wary of the forwarder that claims “cheapie” truckers save you money — the choice may have more to do with fattening the forwarder’s bottom line than moving your freight.
That said, however, using a large national carrier does not automatically mean excellent service. Ask about your forwarder’s criteria for choosing service providers.
Can the forwarder locate every one of your shipments at any given moment and report that information back to you quickly and accurately? Does the technology belong to the forwarder, or is it provided by a third-party technology firm?
• Implementation — Don’t allow grass to grow under your feet when implementing this new alliance. After the contract signing, have representatives of your company’s departments involved in cargo operations meet as quickly as possible with the forwarder’s staff assigned to your business.
Thoroughly discuss the processes and procedures detailed in the new agreement. Develop a realistic work schedule both parties can adhere to that clearly defines implementation steps and responsibilities. Circulate the schedule among senior executives for their comments and evaluation.
Choosing the right forwarder will go far in avoiding many of the problems inherent in shipping millions of dollars worth of cargo. It allows the shipper to focus attention on broad management strategies and not on the nitty-gritty business of moving freight.
The author heads a diversified third-party logistics provider based in Rancho Dominguez, Calif., and comprising DHX-Dependable Hawaiian Express, DGX-Dependable Global Express and DAX-Dependable AirCargo Express.
