Choosing a freight forwarder

Ten things to consider when choosing a freight forwarder

By Peter Townley
Director, Townley Group International

1. Do your homework

Find out how the freight forwarder’s business operates.

Is it a highly fluid company – or are there many hard and fast compliance rules in terms of customer relations?

A highly fluid organisation can react quickly and doesn’t need to have decisions made by committees on each and every issue.

Most issues are small and can be worked out early and with great ease.

2. Meet the team
Make an appointment and meet the freight forwarding team.

These are people the project will deal with each day.

Both parties need to know the other well enough so that any problems or challenges can be worked out as a team.

Many hands make light work!
3. Any concessions?

Sit down with the freight forwarder’s customs manager and go through your cargo list.

There may be a number of concession or exemptions for the project under existing Government concessions. This is vital, as an incorrect entry by a broker may cost the project thousand in revenue that may not have had to be paid.

A good customs manager will be able to assist with this and all concessions.
4. Plan and exchange ideas

Work out a program with the project team leader but ensure everyone meets and exchanges ideas. It’s important that your program and expectations of delivery are clear.

The forwarder can appoint an in-house team which can handle all expediting and keep the project team updated as to cargo readiness and shipment dates.
5.       Trial some shipments

Run a few trial shipments with the forwarder, to test their capabilities when it comes to time-critical shipments.

Test shipments help you evaluate the forwarder, but also help the forwarder evaluate the client.
6.       Who’s in charge?

Establish and communicate to all stakeholders the reporting lines.

If the forwarder doesn’t know your reporting lines it will only serve to make the project teams job harder.

The forwarder has the tools at their disposal; it’s just a case of the project team telling them what they need. 
7.       Agree on finance and payment terms – before you start

Sit down with the owner of the company and the head of finance and workout the payment schedule. This is vital, as like any other business it relates to cash flow. This is always the biggest stumbling block when it comes to a project.

The numbers are very big on projects and a good forwarder knows that the project is responsible to shareholders and other stakeholders. As such, the forwarder should provide correct and precise billing including any and all relevant documents for payment approval.

The project team can only approve the payment when all information has been supplied.

Clear direction at the start will avoid issues later.
8.       Bring finance teams together

Ensure both companies financial teams meet, as this can be a point of contention when it comes to perceived payments schedules. Personalities sometime clash.

A good way of avoiding this is for both finance teams to meet and discuss their ideas and procedures.

Every idea is a step closer to payment and client satisfaction.

9.       Establish ground rules

Set the ground rules early so that both parties understand what’s required.

Draft the rules and regulations and have both parties sign off.

Each company has a different set of terms and conditions and the projects have very rigorous terms.

Both parties need to negotiate these terms at the beginning and make sure they have read and understood what is required.

Once signed, both parties have a cooling off period of seven days in which to cancel or change portions of the contract.

I recommend both parties meet their solicitors, so that all areas are crystal clear from the start; as the French saying goes “Bon papier fait de bons amies” [Good paperwork makes good friends!]
10.  Read and understand the T’s & C’s

Make sure all parties understand each other’s terms and conditions including the booking note for ships and aircraft – along with specialised equipment.

Both parties need to be fully aware of the responsibilities and liabilities under the Bill of Lading (BOL) and airwaybill along with any heavy transport or specialised equipment hire. It can become expensive if something is not agreed or understood.

Shipping lines especially have very strict rules governing the vessel.

The BOL is a very powerful instrument which can tie the consignee or shipper into a number of heavy charges including detention demurrage; the clauses pertaining to these need to be fully understood by the client and the forwarder.

Under the Australian Federation of International Forwarders’ terms, a forwarder must have their client sign off on the terms and conditions prior to any contract being entered into by either party.