Most shippers learn about booking freight through trial and error. And there are often a lot of errors. Inexperienced shippers often rely on their suppliers to tackle the challenge of getting the goods from the factory to the door.
If you are a shipper with manufacturing facilities overseas, such as in China, it's likely that your supplier has the best knowledge of the local trucking ecosystem. He or she is connected to the local supply chain community and has likely booked shipments for other clients. In fact, having a supplier book local trucking is so cost-effective that "FOB Origin" - where the transfer of ownership of the goods happens at the dock of the foreign port - is one of the most popular incoterms. Here's a visual example of FOB Origin. The supplier is responsible for handling the portion of the trip on the red roads.
However, there are limitations to relying on a supplier for your end-to-end shipping needs. Your supplier's main job is to produce your product, and they're probably busy. Since quotes can be time-consuming, they're unlikely to spend days shopping around for the best solution for your needs. Freight forwarders and transportation professionals have a much better sense of the fair market value of freight costs. As a result, freight professionals are likely to offer better rates for the full transportation chain. Shippers that receive quotes directly from ocean carriers are likely to get rates that are even lower.
So how can you leverage your supplier's expertise while still getting the best freight rates? For starters, investigate your incoterms options. Work with your suppliers to make sure that you have the best incoterms for your specific needs. For example, many importers new to shipping buy their goods using an incoterm known as "ex-works". This means they have to arrange - or pay a forwarder to arrange - trucking and customs clearance in the country of origin. They miss out on the chance to leverage that supplier's local knowledge. Switching to FOB Origin is probably a good choice.
And for the remainder of the shipping journey, leverage today's new shipping technology platforms to get informed. Haven's Platform lets you see sailings and rates. It can help you get a sense of what the market looks like and select the lowest rate, shortest transit time, or whichever combination of factors is most crucial for your business. And our account executives are standing by to help when you have questions.
As a shipper, you have more power than you think!
(Coming up in our next post: how to increase margin with a few simple steps...)