How Freight Forwarders Can Help Move Your Goods

When manufacturing is outsourced overseas, the products must be moved across international boundaries and over longer distances. The paperwork, clearances and shipping services required to do this can make the process complicated at times. Usually, the best way to handle everything is by using a freight forwarder to help things run smoothly.

Requirements when moving goods between countries

  • International shipments of manufactured goods can be broken down into the following steps:
  • The manufacturer declares the goods are ready for shipment.
  • Customs is contacted to clear the goods for export.
  • The cargo is picked up and taken to the port of departure.
  • The goods are loaded for shipment and given final customs clearance for export.
  • The cargo is shipped to the port of entry in the destination country.
  • The cargo is unloaded and cleared through customs (the necessary documentation should be prepared prior to arrival)
  • The goods are picked up, shipped and delivered to the buyer

What freight forwarders do
With all the steps and paperwork required in shipment, freight forwarders are sometimes referred to as the travel agents of trade, since they make shipment so much easier. They are basically companies or individuals that arrange transportation between countries through regular shipping channels. Some of their functions include:

Documentation
Freight forwarders help prepare and review paperwork to include the commercial invoice, shipper’s export declaration and the bill of lading. They can also be utilized to insure proper marking and packaging. For smooth shipment, transshipment and customs clearance, all documentation should be prepared early and ready before the goods reach port, and a freight forwarder will help insure everything is done properly.

Arranging shipment
If the goods are on the other side of the world, it can be difficult to ship without help. A good freight forwarder will help find the best shipping channels to keep everything moving until the goods reach the final destination. They are particularly useful for smaller orders when the quantity ordered is less than a full container (LCL). A freight forwarder can help lower the costs of shipping this way by combining different shipments to make a full container load (FCL).Freight Forwarders

Consolidating payments
Freight forwarders can pay taxes, shipping and other expenses on the buyer’s behalf and will consolidate different payments into a single bill.

Insurance
Freight forwarders are usually able to supply insurance services to cover potential shipping problems.

Other advice
The right freight forwarder can provide valuable advice and help avoid costly problems on other issues that might arise.

Things to look for in a freight forwarder

Anyone who is in need of freight forwarding services should look around to find the one that best suits them. Some things that should be looked at include the rates, accreditation, experience, global reach in both the country the goods originate from and where they will be shipped to, office location, if they have a single point of contact and their consolidation services if the goods shipped will be LCL.

The final decision on using a freight forwarder will depend on the level of experience of the importer, and the ability of the importer to negotiate with the shipping companies for better terms. The complexity of the shipment, time factors and the possibility that the freight forwarder may be able to negotiate the best shipping rates all need to be considered. While freight forwarders are often the best way to move goods, they may not be in some situations.

Changes in China Sourcing

Many picture manufacturing in China as dominated by endless armies of workers toiling at low wages, but reality is far more complicated than that. China’s economic growth in recent decades has lifted many boats including those or many factory workers. This, combined with changes in currency and other factors, means that manufacturing in China is undergoing dramatic changes.  However, with the many advantages China offers in manufacturing, it is likely to remain a factory of the world.

When China first opened to the West, living standards were a fraction of those of the outside world. A seemingly endless pool of workers happy to work for wages others would reject and favorable investment laws made it very attractive to businesses looking to compete through lower labor costs. While issues such as bureaucracy, corruption and different attitudes toward business and quality often made conditions less than ideal, the benefits outweighed the costs for many willing to brave the risks.

In time, as the investment regions and supply chain developed, China become more attractive and accessible to the less brave. It became possible for more businesses to take advantage of what China had to offer, and the quality of the manufacturing improved as China moved up the supply chain and began to produce higher-value goods.

With this success came problems both from within China and without. With its massive trade surpluses, more nations have pushed China to lower them. In response, China begun letting its currency rise (most analysts say it was kept at an artificially low rate to make exports cheaper) and eliminating preferential tax treatment for exporters.

Within China, as living standards have risen, wages for factory workers have increased. This has been especially true in booming coastal provinces where factories often cannot find enough workers and must bid up wages. Workers have become more aggressive too and strikes have increased.

Also, trying to emulate China’s success, other nations have also created economic zones offering favorable treatment to outside investors and exporters. Furthermore, free trade deals the US made with Mexico and other nations has given those nations cost advantages as China’s expense.

In response, China has taken steps to encourage investment in less developed regions in the interior where labor is cheaper and in greater supply. It has also begun to move higher up the supply chain where labor is a smaller portion of production costs.

While some production has begun to shift away from China to cheaper regions or back to countries where the products will be marketed, China still has advantages that will keep it the world’s factory for many products. China has invested heavily in infrastructure and has developed an impressive network of suppliers. This, combined with decades of experience in Western markets, means China will continue to be very attractive as a place to manufacture, albeit production is likely to keep shifting to new areas and more to higher-end manufacturing.

Also, average wages, particularly in the less-developed regions, will remain low by Western standards for the foreseeable future.  No other nation can offer the kind of labor resources and infrastructure that China currently does. For these reasons, China will remain a manufacturing force to be reckoned with. However, exactly what kind of a force it will change into remains to be seen.

A Third Party Inspection Service Can Save the Day

Shipment is one of the final steps of overseas sourcing and likely the most important. Everyone wants to avoid nasty surprises when they receive their goods so it is important to have some way to inspect them before they are shipped. There are different ways to do this. However, in most situations, a third party quality inspection is the best course of action.

The importance of inspection
One should never underestimate the importance of proper inspection before shipment. The chance for error is always present when making any kind of order. With overseas sourcing, the distances as well as shipping times, different legal systems and other factors complicate the process of replacing any defective products. Furthermore, payments are often made in advance and some suppliers may be reluctant to replace goods after they are shipped.

Even though most manufacturers will send replacements without issue, there is still the possibility of extra shipping and other costs, not to mention the lost time and angry customers.

Finally, sometimes improper loading or defective containers can ruin products that were manufactured to specifications.

Ways to pre-inspect goods

The factory agent
Many develop close working relationships with their factory agents and sometimes rely on them for inspection. This can be fraught with dangers though with conflicting interests being a major concern. Agents work for the factory and want to get the goods shipped. They are not likely to make any demands that might delay the shipment or increase costs, even if such steps would be the better long-term course of action.

Even with the best of intentions, the factory agent may not have the time and expertise to properly inspect the shipment. The agents are primarily chosen for the language and other skills so many simply do not have the knowledge needed to insure a shipment is ok.

Personal visits
While it is possible to send someone directly from the company placing the order to check the shipment, this is often not a very practical solution. There are the obvious time and monetary costs of sending someone. Since production and loading takes time, multiple trips may be needed, particularly when there is more than one order or supplier. Finally, specialized knowledge in loading and other aspects of shipping are required for a good inspection in many cases.

Third party quality inspections
There are many companies that specialize in third party quality inspections. A good company will send qualified engineers and others with specialized knowledge of product inspection, loading and shipping. They can witness the actual handling and loading of the cargo, verify container markings, photograph, check documentation and send a report to the purchaser. If there are any issues, they can hold the shipment until they are resolved.Third Party Inspection

Any business using third party quality inspections should ensure it is a reputable company with good personal near the factory. It is also important to make sure the inspection company does not have any relation with the manufacturer that would represent a conflict of interest. Considering the costs of mishaps, purchasers should be wary of cutting corners, but the fees charged by these inspection companies are usually quite reasonable.

It is not advisable to entirely entrust in a third party quality inspection. Make sure the contract with the manufacturer states inspection by a third party does not release them from their responsibility to replace any goods that are found defective upon arrival.

While it is sometimes possible to do business without inspection before shipment, it is not a good idea in most cases. If carried out by a good company, a third party quality inspection is often the best choice.