The first couple months after the new year are a pretty common time for shippers to consider switching their freight forwarders. Year-end budget reviews, performance assessments, and the end of the fiscal year expose areas of weakness and needed improvement, and it’s not uncommon for a company’s freight forwarder to get the boot. And we understand why.
With logistics, there’s never any one way to do things. After all, shipping isn’t just a commodity – it’s a strategy, and as with any plan, process, or strategy, there is always room for improvement. So, when the search begins, the question is how you’re going to evaluate if a new freight forwarder is capable of bringing what your team needs.
RFQ Planning: What to Ask Potential Freight Forwarders
Ironically, while shippers usually switch freight forwarders over issues other than price, the most common method of scoping out a new freight forwarder is through issuing RFQ’s. In other words, pricing is rarely a frustration for shippers in comparison to greater issues like communication, accountability, and transparency, and yet it’s the sole factor of comparison used when searching for a new forwarder.
With that in mind, here are a few things you should be asking yourself as you enter the freight forwarder RFQ planning season:
Are You Comparing Apples to Apples?
RFQ’s are actually pretty illusive. You may think you have a good understanding of what a freight forwarder is pricing you on, but there are way more factors which need to be considered for accurate pricing than a simple origin and destination point. And this is precisely what frustrates freight forwarders when it comes to responding to RFQ’s.
Are you taking into consideration the incoterm which will be used? A simple difference in an incoterm can double or cut in-half your pricing. Do you have any contracts with a carrier? Does your freight forwarder have specific contracts? Are there alternate solutions for moving your cargo, such as intermodal inland transport that can further reduce pricing?
These are some of the biggest issues with RFQ’s. You receive back 10 RFQ’s from freight forwarders, but the difference in pricing on their responses is due to the fact that they are pricing different services. Ensuring that you are comparing apples to apples is absolutely essential in the RFQ process.
Why Are You Currently Switching Forwarders?
If the only reason your switching forwarders is due to pricing, then a simple RFQ process makes sense. However, our market research indicates that pricing doesn’t even make the list of greatest frustrations in the shipping industry.
Shippers will usually switch because their freight forwarder completely drops the ball on a shipment, continues to make the same mistakes over and over, has poor communication practices, and leaves their clients eating crow while they have a hundred excuses as to why it’s not their own fault.
So, you’re searching for a new freight forwarder… based on… pricing?
Make sure you are 100% clear on why you are switching freight forwarders. Unless it’s entirely because of costs, you should revise your RFQ process to include an actual analysis of each candidate’s competency in a variety of areas.
What do their contracts and connections look like? Is their carrier network expansive? What do they specialize in? Will you be connected with employees who are empowered to make decisions, or will you always be speaking to someone four levels under a manager that can actually act to fix an issue while your cargo is in transit?
“We’re unique because of our customer service!”
“We’re unique because of our experience!”
Last I checked, if 50% of the world’s forwarders are all bragging that the same factors make them different from the competition, no one is different.
What is it that actually makes the freight forwarder you’re looking at unique? Do they have a process in place to handle their customers that sets them apart from the competition?
Don’t machine gun 100 RFQ’s to random freight forwarders and arbitrarily select one because their numbers are the lowest on a generic excel doc. Find what it is that actually makes each freight forwarder unique and factor that heavily into the decision-making process.
Here’s the reason that finding what makes a forwarder unique is so important: If a freight forwarder is doing something different than the competition and has a proven track record of it working, it’s a safe bet that they are actively investing in continuous improvement and customized solutions for their clients. That will result in greater success for your company, lower frustrations, and decrease the amount of time you spend writing their wrongs and covering up their failures from your customers.
Where to Go from Here
If you’re looking for a new freight forwarder because your current shipping practices and logistics company isn’t working out, it’s time to look at options based on factors beyond pricing. Issue RFQ’s if you must to ensure a forwarder isn’t too far out of your pricing range, but spend more time evaluating forwarders on what makes them unique, how expansive their network is, and what their internal structure looks like in regards to your connection to employees who are empowered to make decisions.
At Interlog USA, we conducted years of market research to figure out why shippers were switching their freight forwarders, and we came to find that 90% of shippers’ reasons could be boiled down to 4 main categories: pricing transparency, shipping claims processes, communication disconnect, and unmet expectations.
We created the SHIELD Protocol, which is the only process that actively solves the 4 Great Burns of the transportation industry. If you’re interested in learning about how the SHIELD Protocol works and whether or not we would be a good fit for your company as you look for a new forwarder, please don’t hesitate to simply reach out to one of our team members. We’d be happy to answer any questions you have and help your team get the information you need as you evaluate freight forwarders!