Monday, June 29, 2015

How Do I Choose a Freight Forwarder? Advice from One Who Knows

This Month's Guest Blog Points Out Some Realities of International Supply Chain Costs
Shipping News Feature

UK – The current economic climate in the UK, with fluctuating fuel prices and plummeting freight rates, will doubtless be welcomed by some and abhorred by others. For those who are about to enter the import or export market and are searching for a reliable freight forwarder there are however many more factors to be taken into account. At the Handy Shipping Guide we receive many requests for assistance in choosing an agent and we direct people to those obvious criteria, trade accreditations such as BIFA, RHA or FTA membership, plus how long a company has traded. This month’s guest blog relies on the opinions of Alan Platt, MD of John Good Shipping, itself with a 180+ year pedigree.

“As we all know too well, freight rates in the current market – particularly on the Asia-Europe trade – are at record lows. This is undoubtedly a positive for importers up and down the country but has far reaching implications on the industry as a whole and changes the whole dynamics of the supply chain.

“In the UK we have seen a welcome decrease in fuel prices which would suggest the overall cost of importing goods from the manufacturer’s warehouse to the importer’s door has reduced. This is indeed true, however this is not the whole story. Freight rates remain at rock bottom on key trades which has thrown the spotlight onto other cost elements within the supply chain, specifically the cost of bringing cargo from the port to its final destination in the UK.

“If you think about it logically, the cost of importing goods incorporates a wide range of variable cost elements. Take the Asia-Europe trade, for example – in today’s market freight rates account for just a tiny proportion of the entire supply chain. There are other cost factors such as customs clearance fees, documentation, terminal handling charges and associated ancillary charges plus the hefty transport costs once your cargo has been discharged from the vessel.

“Here is where an element of caution is required. It is easy to be attracted by seemingly rock bottom freight rates, but the real question has to be: ‘what is the overall bottom line cost?’ UK landside charges can be significant, more so today than perhaps ever before, and these costs are dwarfing freight rates on many key trade lanes. It is important that customers look at the bigger picture, without becoming fixated on freight rates, as they could be losing out. It is easy to reduce freights to attract customer attention and subsequently off-set this with high delivery charges.

“In today’s market, customers need to pay attention to the overall door-to-door cost. If you’re importing a container from Shanghai to Felixstowe, with final destination Leeds, you need to seriously consider the cost implications of getting your container from Felixstowe to Leeds. Like a marathon, the last leg of the race can be the most taxing.

“This is where a trusted and reputable freight forwarder can prove invaluable and save you money. As a business owner or import manager, it is imperative that you keep your freight costs down to a minimum, but where can savings really be made given the current backdrop of the shipping industry? It can be dangerous just to assume that freight rates alone will drive down the cost of importing your goods.

“Let’s go back to the scenario of an importer based in Leeds with a container coming over from Shanghai. There’s a further 200 plus mile journey for a container to be delivered to its final destination once it has arrived at a UK port. Landside costs can vary significantly and selecting the right forwarder for your freight but the wrong one for you transport could be detrimental.

“Choosing the right port of discharge closest to the final destination can also pay dividends. Regional ports play a vital role in the supply chain and can offer real cost savings, therefore it is important you rely on a freight forwarder that can offer the best advice and a range of different solutions to ensure value for money in the long run.”