Freight, Logistics, and Specialized

Transportation Issues for Import/

Export Managers

Chapter 3
 Outline
• Introduction
• Using Service Providers
• Import/Export Trade: Five Key
Areas to Get the Best from Your
Forwarder
• Negotiating International
Freight Rates
• Put Everything in Writing
• Logistics Services
 Managing logistics in the import/export
trade is critical because shipping costs and
shipping efficiency will determine the
bottom-line competitiveness of the
transaction.

This chapter dissects all the material one

needs to know about managing
import/export logistics and obtaining great
Introduction value for all the external services
necessary to move products
internationally.

Specialized international transportation

situations are reviewed with an outline of
solutions and options.
 Freight forwarders, customhouse brokers, and
third-party services are excellent partners to
assist corporations in managing their supply
chains. They can be ‘‘all things’’ to all people
or you can select among the services they
offer.

Using
Irrespective of the extent to which you utilize
Service them, they can be of service in your global
Providers supply chain.

They typically have expertise, qualified

personnel, and resources to make your supply
chain function in a timely, safe, and cost-
effective way.
 • A good service provider can be a
tremendous advantage for importers
and exporters to partner with to
control landed costs and earn
Using sustainability in their global supply
Service chains.
Providers • A service provider can make or break
a supply chain; a top-shelf one will
be an integral component of its
success and long-term future.
• The chapter also describes in detail
the services they offer and how best
to use them to obtain a competitive
advantage.
 • The quality of your freight
forwarders and the delivery of
the international services they
Import/Export provide is key to the success of
Trade: Five your import/export operation.
Key Areas to
• Even though they sometimes
Get the Best
from Your seem to be nothing but a
Forwarder necessary evil, forwarders can be
your best ally in mitigating the
hazards of world trade and
assuring successful and profitable
international transactions.
 • Like other key vendors, freight
forwarders need to be
managed and treated as
Import/Export partners with mutual goals,
Trade: Five common direction, and a full
Key Areas to understanding of what each
Get the Best party brings to the relationship
from Your and ultimately the benefit to
Forwarder each other through the
association.
• Five key points in this regard
are presented in this chapter:
 Five key points in this regard are
presented in this chapter:
Import/Export
1. Selection
Trade: Five
Key Areas to 2. Logistics consulting
Get the Best 3. Pricing
from Your 4. Value-added services
Forwarder 5. Setting performance standards
 There are several resources to help you
determine what forwarder to choose:
• • Go to other shippers for referrals.
• • Ask carriers for recommendations.
• • Check the Export Yellow Pages.

Selection • • Check the American Export Register.

• • Associations such as NCBFAA
(National Customhouse Brokers and
Freight Forwarders Association, TIA
(Transport Intermediaries Association)
and AFF (Airfreight Forwarders
Association) are also excellent sources
of highly qualified service providers in
global supply chain options.
 Potentially, there are another dozen
resources to turn to, including other
shippers who have firsthand
experience.
To determine if the freight forwarder
is suited to meet your needs, you
must set up selections criteria.

Selection For example, a large shipper may

have a fully staffed traffic department
and may be fully capable of executing
documentation and negotiating
freight rates.
However, a small shipper may require
the freight forwarder to execute
every document, from the pro forma
invoice, the export declaration, and
the certificate of origin, to the bill of
lading, etc.
 Freight forwarders vary greatly from one
another in skills, capability, and delivery
of services. Some forwarders are
specialists on certain trade routes,
specific commodities, degree of value-
added services, etc. Some shippers use
two or more forwarders for different
areas.
Selection It is suggested that you create a list of
criteria, which would be a reflection of
your needs.
This should be given to the forwarder to
obtain a proposal from him.
The proposals from various forwarders
will serve as a gauge for evaluation of
their services in the areas you have
identified to be important.
 For example:
• Documentation, rating, carrier selection
• Packaging, insurance, warehousing,
electronic data interchange (EDI)
• Knowledge of your product
Selection • Tracking and tracing
• Customs clearance, labeling, hours of
operation, rate negotiation.
• Import/export compliance management
• In-house education and training
• Technology capabilities
 • One of the most important services
a forwarder can provide is advice
and counsel.
• Most shippers would probably tell
you that the single most important
factor in freight forwarder selection
Logistics is the forwarder’s experience,
Consulting resources, and general working
knowledge of international trade.
• The freight forwarder can make
significant contributions to your
overall sales, marketing, pricing, and
distribution choices.
 Logistics
Consulting
• If you typically sell on a cost, insurance,
freight (CIF) basis and are now
venturing into a totally new market,
your freight forwarder, based on
previous experience, may advise you
that the claims experience is
horrendous in the importer’s airport of
entry or port facility and that you
should amend your terms to a cost and
freight (CFR) basis.
• This obviously will affect pricing and
may be a key factor in making the
transaction profitable in the long run.
 Another example The forwarder
may be that you might guide you
Logistics are experiencing a to changes in
frequency of packaging that
Consulting damage claims via would better
a particular mode protect your
of transit. cargo and lead to
fewer losses and
more satisfied
customers.
 Pricing
• Pricing can vary among different forwarders. We
suggest that pricing always be obtained up front.
• In some situations, it may be impossible to estimate
costs exactly, but in most cases forwarder can provide
a fairly accurate estimate.
• Two basic elements of a freight forwarder’s charges are
fees and carrier costs.
• Obtaining shipping information, contracting overseas
agents, follow-up, faxing, negotiating rates, and
preparing documentation all have costs attached.
 Following is a
breakdown of your
potential shipping
costs:
• Domestic Invoice Total–
Pricing Additional Domestic Costs
• Shipping and Documentation
• Banking and Finance
• Freight Forwarding Fees
• Insurance
• Freight
 • A forwarder can provide an array
of services that may be
considered standard or value-
added. For example, you may be
Value- entering a new market in a
different country.
Added • In your analysis, you will need to
Services be supplied with a significant
amount of data.
• Your forwarder may be in a
position to review your needs and
provide feedback in areas such as:
 Your forwarder may be in a position to
review your needs and provide
feedback in areas such as:
Export shipping and mode options
Costs of shipping
Value- Documentation requirements

Added Packaging considerations

Warehousing and inland transit
Services options (third-party logistics)
Legal and government restrictions
Labeling requirements
Distribution systems
Compliance management
Technology capabilities
 • We are strong advocates of making
sure that freight forwarders keep
their promises and maintain high
standards leading to cost-effective
service and on-time performance.
Setting • Following are five steps that can be
used to maintain the forwarder’s
Performance performance:
Standards 1. Keep all commitments, quotes,
proposals, promises, etc., in writing.
2. Allocate time frames to all jobs.
Maintain a diary and follow-up
schedule to determine responsiveness
and accuracy.
 3. Have all jobs quoted. If there is no time
to quote, then have pricing made available
as soon as practical.
4. Have your forwarder submit annual
stewardship reports and bring in
competitors from time to time.
5. Demand regular meetings with your
Setting forwarder. Gain access to senior
Performance management.
Standards • It is also recommended that you meet
with all staff and operating personnel and
make sure they are familiar with your
account, your needs, and the promises
made by their salespeople.
• Knowing who the operation personnel
are is key, as they sometimes become far
more important to you than the
salesperson.
 • Acquire the Skills to Negotiate
Global Transit Costs.
• Importers and exporters who face
the reality that the better they
negotiate their freight rates, the
more competitive their products,
and the result will be greater
Negotiating opportunities to make higher
International profits.
Freight Rates • Regardless of who pays directly for
the freight costs in an export sale,
the customer will eventually pay for
it.
• By controlling the cost, you will
favorably affect customer
satisfaction. Because you get what
you pay for, let us consider the first
step.
 It is key that you provide
both quality and up-to-
date shipping information.
Provide The following as basic
data is recommended:
Quality
• Specific descriptions of products.
Information • Advise points of origin and times
of availability.
• Identify packaging and unitization
(pallets, slip sheets, D containers).
• Give dimensions, including
unitization pieces (i.e., pallets).
 Provide Quality Information

Identify Advise on Provide Advise

Identify all Advise on Provide all Advise terms
shipping needs, any tangible delivery of sale and
who is to information information payment.
prepare (e.g., (e.g., This includes
documents, perishable, address, the use of
insurance
required, fragile, telephone the INCO
clearance hazardous). number).
needed.
 Incoterms, a widely-used terms
of sale, are a set of 11
internationally recognized rules
which define the
responsibilities of sellers and
buyers.
Incoterms Incoterms specifies who is
responsible for paying for and
managing the shipment,
insurance, documentation,
customs clearance, and other
logistical activities.
 Put Everything
in Writing
• It can be very frustrating to
have billing disputes between
exporters and carriers after
freight has been shipped.
• For this reason alone, it is
recommended that all quotes
be put in writing.
• This prevents future headaches
and can limit litigation
potential when disputes occur.
Logistics Services

What Are Logistics Services?

• The logistics services industry is defined as the obtaining,
producing, and distributing of materials and products in the
right quantities to an end user or final destination.
• It includes the science of planning, implementing, and
managing procedures for the most efficient and effective
storage and transportation of goods as possible.
• Services and related information from the source point to
the consumer is sent through logistics to fulfill and meet
customer demands.
Logistics Services

What Are Transportation Services?

The movement of people, goods, and animals from one
location to another by air, rail, road, sea, cable, space, or
pipeline is known as transportation.
Transportation services are divided into three aspects:
infrastructure, vehicles, and operations.
Transportation is very important because it allows
communication and trade between two parties.
Logistics Services

The Difference between Logistics vs. Transportation

Although both transportation and logistics deal with getting
valuables from one location to another, logistics has added
benefits and functions.
Logistics executives also have to make decisions dealing with
packaging, containerization, documentation, insurance,
storage, importing and exporting regulations, freight damage
claims, working and collaborating, managing vendors and
partners, and risk mitigation.
Logistics Services

The Difference between Logistics vs. Transportation

Even though these terms have been used as a
substation for each other, the key differentiators are
that logistics deals with the integration of storage,
transportation, cataloguing, handling, and packaging
of goods while transportation deals with the function
of moving products or individuals from one location
to the next.