Standard vs. customer routed shipping is a common topic in the international transportation industry. Although many people would like to have ownership over all the details surrounding their shipment, we also all know that more control means more responsibilities. In the case of customer routed vs. standard shipping, there are multiple strengths and weaknesses to both sides of the coin. Before diving into some of the primary benefits of controlling your cargo vs. customer routed options, let’s first define some terms and how each method works.
Shipping via standard methods in an export scenario means that you as the supplier or seller are controlling the logistics process and decisions. In other words, when you export goods to your customer overseas, you are the one in charge of selecting a freight forwarder, insuring the goods, and sending them out on an ocean vessel. If a U.S. based importer is controlling cargo decisions, we would call this a customer routed import.
The terms can get a bit difficult since there are technically 4 ways they can be utilized. Here are ways to categorize the shipping terminology for different buyer/seller/importer/exporter circumstances:
- Export Shipment, U.S. Personnel Controls the Cargo: Standard Shipment OR Supplier Routed Export
- Export Shipment, Foreign Personnel Controls the Cargo: Customer Routed Export Shipment
- Import Shipment, U.S. Personnel Controls the Cargo: Customer Routed Import Shipment
- Import Shipment, Foreign Personnel Controls the Cargo: Supplier Routed Shipment
For now, we will define decisions made by the U.S. party as standard shipments, and decisions made by the foreign party as customer routed. The topic walks hand-in-hand with global and international marketing, so make sure to read our post on that as well. In this case, here are some of the strengths and benefits of controlling your own freight instead of giving control to the foreign party.
Benefits of Controlling Your Cargo (Standard Shipping)
There are a ton of benefits of controlling your cargo rather than having it customer routed (or foreign supplier routed). Having more control, visibility, and leverage in the decision-making process for cargo routing options puts you in a place to make more educated business decisions and financial agreements. Here are a few of the more common benefits of controlling your cargo – “standard” shipping:
Time Zones: Forwarder Communication
When you are in control of your own freight decisions – either as a supplier in an export from the U.S., or as the customer of an import – you get to select a freight forwarder of your own choice. Obviously, with customer routed cargo, the foreign customer will almost always select a forwarder local to their business. This means you’ll deal with bad communication hours, language barriers, and other communication roadblocks in the shipping process.
However, when you oversee all cargo routing options and decisions, you are able to select a U.S. based freight forwarder which means: better communication hours, no language barrier, and more visibility. There’s no doubt that having control over freight forwarder selection is one of the benefits of controlling your cargo.
Tracking and Tracing
Usually, tracking and tracing is not made available to the consignee. So with customer routed cargo, you as the U.S. based party may be left in the dark on where your shipment is and when it will arrive. When you are in charge of freight decisions, you have the added benefit of visibility into the whereabouts of your cargo.
If the U.S. forwarder your company selects is anything like Interlog USA, you’ll have 24hr access to a track and trace database where you can view all of your past and current shipments.
Another one of the benefits of controlling your cargo revolves around payment terms and shipment details. In the case of customer routed cargo, the customer (or foreign supplier) may not be able or willing to provide these payment terms. Often, a foreign supplier (in the case of an import) will bill you for the transportation before the container even ships. Likewise, with an export, your foreign customer may bill you for these logistics costs before your container(s) even leave the port.
This walks hand-in-hand with the benefit of forwarder selection but on a larger scale. Late hours, weather changes, and so many other circumstances can throw the shipping process off its predicted course. If you’ve ever handled more than a dozen shipments in your lifetime, you are near guaranteed to have experienced this firsthand. You want flexibility. If you let a foreign forwarder determine your U.S. trucker or customer broker, you will sacrifice a great deal of customer service. They will often pick the lowest cost rather than pursuing high quality. Communication is one of the primary benefits of controlling your cargo, since only you can be sure of the best options on the U.S. side.
After selecting a U.S. based freight forwarder, your vendor will begin looking for the best routing and transit time options. In the case of customer routed cargo, a foreign vendor will often look for the lowest cost route options, causing a high potential for mishaps/overlooked details/etc.
Why Do People Select Customer Routed Cargo Then?
Well, there is one primary reason that businesses in the U.S. (especially large ones) like customer routed cargo. It has everything to do with workload and responsibilities. While controlling your own cargo via standard shipping methods gives you a ton of benefits, it can also be a bit more work. Selecting a forwarder, hiring someone to file AES, and tracking containers can all take a lot of time. Massive companies often don’t have the dedicated staff required to manage all of their exports and imports, so it is a better option to have their foreign customers and suppliers take care of the shipments they are involved in.
Selecting the Correct Method for Your Business
We get it – choosing between standard shipping or customer routed shipping can be stressful. Customer routed cargo means less work on you and your team. You wouldn’t be in charge of nominating a forwarder to arrange the ocean freight.
However, customer routed cargo isn’t always as good as it sounds. Unfortunately, less responsibilities doesn’t mean less work. With customer routed cargo, you are working with a forwarder in a different time zone, tracking and tracing isn’t always available to you as the consignee, and payment/routing options are tailored to be lowest cost; not highest quality. Furthermore, since you’re not in charge of making the decisions, you have less control when things go sideways.
Obviously, one of the benefits of controlling your cargo is that you can nominate a forwarder of your choice to accommodate your specific price/transit time balance. It also means you’ll be communicating with someone of your own native language, in your time zone, with preferable routing options, and cargo tracking and tracing capabilities. It’s a tough decision, but despite popular belief, we find that customers save the most money, encounter the least amount of problems, and end up with a more streamlined shipping process when they control their own decisions.
If you are interested in learning more about customer routed cargo or standard shipping, give us a call. There’s no pressure in a 5-minute conversation and you would leave knowing more than you did before the call. Reach out and we’d be happy to chat with you!