Due Diligence in Selecting a Freight Forwarder
/Extracted 28MAY2011 from http://www.logisticsmgmt.com/article/freight_forwarding_choosing_the_best_par...
“Third- and fourth-party logistics providers are always freight forwarders,” says Shay Scott, director of the Global Supply Chain Institute (GSCI) at The University of Tennessee. “But it’s never the other way around.” Nor should it be, he adds. Given that not every shipper faces the complexity of penetrating a new global market or extending its existing supply chain across vast “borderless” regions.
“So while some Fortune 500 companies really do need a Fedex Trade Network, or UPS Logistics, or a Penske, many other U.S. exporters only require a basic forwarder,” says Shay... He notes that U.S. companies doing business in Mexico, for example, might be better off with a small forwarder located near the border... “The shipper’s focus should not be on the country he’s trying to enter, but the port of entry,” says Shay. “And many of the smaller forwarders have better relationships with Customs at these stations than the bigger players.”
According to Rosalyn Wilson, senior business analyst at Delcan Corp., a supply chain consultancy in Vienna, Va., picking the right global freight forwarder still involves considerable diligence... “Probably the most important factor to consider is experience with the types of products you ship and familiarity with the routes you use,” she says... She also encourages shippers to ask if the forwarder has offi ces, partners, and employees around the globe—local agents in the origin or destination country or city to ensure that the cargo was handled correctly.
Other supply chain analysts stress that forwarders must provide a “visibility network” in any offering they provide. “I would say that today’s integrated logistics capability puts a premium on visibility and information,” says Greg Aimi, director of supply chain research at Gartner... Charles Clowdis, Jr., managing director of transportation consulting and advisory services at IHS Global Insight, agrees with Aimi, noting that with the rapid changes in supply chain methodology, attention to detail, especially in your forwarder’s IT capabilities, is critical... Clowdis adds that these key elements should be supported by a robust visibility network that allows the forwarder to see each incremental step along the supply chain and to react to any event “affecting the smooth and scheduled flow of shipments…and support contingency options should the need arise,” he says.
Another strong point would be accreditation under the International Quality Standard ISO9000:2000. Also keep in mind that a forwarder that’s a member of C-TPAT means they have met certain security standards and will ensure a smoother trip for your shipment.
Wilson, Clowdis, and Aimi all certainly agree that a shipper should ask for references, for both their forwarding business in general and specific references for the product, markets, and services that the shipper will be using.“It’s critical to find out how long they have been operating and how well established they are in your target markets,” says Wilson. “But once you have a good forwarder, the temptation will be to use them for everything. So, make sure to evaluate if your shipment really needs that level of service or if a standard courier service would work just as well at a lower cost.”
[Erratum] Shay points to the work of Pankaj Ghemawat, of IESE Business School in Spain, who recently authored the book, World 3.0. In it, he notes that the number of American companies with any foreign operations is vastly overstated, and that exports remain a relatively small part of GDP. [This is a somewhat accurate but misleading representation of Ghemawat's work. Ghemawat shows that there is plenty of room for growth of globalization precisely because the extent of globalization has been overstated. The point behind the title is that Ghemawat is arguing for something that is neither World 1.0 (reactionary or imaginary protectionism) nor World 2.0 (unfettered globalization as suggested analogically by Web 2.0). He argues from various sources of data that distance matters and borders matter in globalization. In other words, global markets are accessibly non-flat which implies a need for careful navigation of such markets and avoidance of seductive overarching assumptions about the world beyond one's borders. Among other factors, Ghemawat emphasizes the role of culture, administration, geography, and economics (CAGE constraints) in ways that imply opportunities as well as limits. The book contains data and insights that are highly relevant to changes in strategy and execution of cross-border trade in the foreseeable future, and it has important implications for how risk and security of cross-border trade are conceptualized and addressed. See also http://logistics-transportation.posterous.com/ghemawat-v-friedman-on-globaliz...]