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The Number One Mistake Startups Make? Skipping over Freight Forwarding

Feb 15, 2019 1:32:07 PM / by Fauad Shariff

We’ve worked with a lot of startups over the years that have wonderful products, eager customers, and, unfortunately, a major gap in how they plan to get their great ideas to the people who want them. In fact, in our experience, startups can do ideation, development, manufacturing, warehousing, even last-mile delivery pretty well. But getting their game-changer across oceans almost always proves to be a challenge.

When we speak to founders looking for a better freight-management solution, we hear some common themes. We ask them if they used a freight forwarder, and they say yes. We ask them how they chose one, and the answer is usually either “a friend of mine knew a guy” or “I Googled one.” And then we ask them how their shipment went. Here are the most common responses:

  1. Great customer service (good to hear!)
  2. Lack of transparency (troubling...)
  3. My containers arrived with a lot of hidden costs suddenly tacked on (unacceptable!)

Startups and other newcomers to freight procurement often try to speed through the first- and middle-miles of selling their product. But if you don’t get freight forwarding right, your disruptive product will sit in a warehouse overseas or in a container at a port without clearance. Soon, you’ll be writing more checks than you thought you would, and your deliveries will be delayed by days, even weeks.

Freight forwarders are indispensable, especially when you’re new to the freight management world. The right freight forwarding partner is critical to doing business. Here are some tips on how to find the best one.

 

Get Referrals - a Lot of Them

We can’t stress this enough: don’t just Google “freight forwarder”! It’s imperative that you talk to multiple people before making a decision about who you’re going to pay to help ship your precious cargo.

It’s also a good idea to talk to people within your general space since every type of freight carries its own nuances, restrictions, customs protocols, and even fees. For startups, at the very least, talk to other startups. Your shipment requirements will not be the same as Apple’s.

Read More: Apple vs. Amazon: The Trillion-Dollar Logistics Showdown

For example, shipment volumes can fluctuate from order to order depending on your sales volume and schedule requirements. It’ll be nearly impossible in the early days of your business to just “set it and forget it” for months on end. Get referrals for freight forwarders who know about the intricacies of both your product and the stage of your business.

Not sure where to start? Don’t have a freight forwarding friend or a founder nearby? Here’s a little personal plug: CoLoadX is one of the few freight handling platforms that works for freight forwarders and NVOCC’s, not around them. We believe freight forwarders bring unparalleled value, from documentation handling to special knowledge of foreign business environments where you may be getting your shipment from. And NVOCC’s (the guys who get you the rates from carriers) can do shipment pricing better than anyone else. Finding a rate you like with CoLoadX is like finding a good price and a quality referral in one shot.

 

Look for Transparency

An ugly truth about freight forwarding is that the price you see often isn’t the price you pay. But that doesn’t mean all freight forwarders, NVOCC’s, and multi-modal carriers (i.e. planes, trains, boats, trucks) are out to deceive you and squeeze another buck out of you while holding your freight hostage.

Many surcharges are seasonal, most seem impossible to make sense of, and almost all of them are put on by the carrier, the mode of transportation that’s handling your container. Your freight forwarder can’t really do anything about these surcharges. But they can be open about them.

Before you make a booking, ask your freight forwarder to itemize your charges for you. All-in rates sound appealing because they don’t come with the added headache of parsing through freight fees you’ve never seen before. But all-in rates hardly ever exist. Every freight forwarder worth working with should be able to tell you what each dollar you’re paying is being spent on.

And remember: despite all the hype behind the digitization of the logistics industry, freight forwarding is still very much a people-run business. That means that there should always be a person to talk to when you want to know more about your package. Here’s a pretty simple rule when picking the right freight forwarder: if they can’t take your call, they aren’t the right match for you.

 

A Technology-Enabled Freight Forwarder Is Mandatory

Yes, I did just say work with the freight forwarding company that has people. That doesn’t mean you should work with a freight forwarder that has never moved beyond the fax machine, though.

Technology in freight management works best as a tool that assists freight professionals, not one that replaces them. Robots might do well in warehouses, but handling your in-transit freight is a different story.

People power and better technology go hand-in-hand. Deliveries can be delayed in countless ways, especially after your container is already in transit. No matter how much of a supporter you are of automation, the day your trucker arrives at the destination port and finds he can’t scoop up your container because customs can’t find fumigation papers, two things are going to happen: you’re going to want to talk to someone who could solve this problem for you, and you’re not going to want your solution to hinge on a successful fax transmission.

Read More: Looking for Logistics Innovation? Keep Your Eyes on Startups

Ask any potential freight forwarder how they’re using technology to optimize freight management. Email is a start; using technology-forward partners like marketplaces is a big plus.

Now, it’s true that many forwarders keep outdated tech as a contingency. The fact is, the global supply chain has many links, not all of which are operating in the 21st century. Fax machines are one thing. Every freight forwarder also has a tale of physically running documents over to a recipient because it was the fastest way to get a shipment handled. Literally sprinting to another office with papers in hand. We’ve seen it.

Companies like ours are trying to modernize the supply chain. That’ll take some time, but freight forwarders tend to embrace new technologies faster than other parties in the logistics industry because they’re the customer-facing component of any shipment. The better they help you, the better their business does. So ask how they’re using technology to help you.

You finally have your MVP, and you’re ready to get your in-demand product to the doorsteps of hundreds of thousands of customers. You’re going to change the world. That’s great!

But don’t overlook how to get your goods from “there” to “here.” That can prove to be a costly mistake that no company can stomach, let alone a startup.


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Topics: Freight Forwarding, NVOCC's, Supply chain, Freight Forwarders, Startups

Written by Fauad Shariff

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