5 myths about transport companies that should not be trusted
There are many organizations operating in the international transport and customs logistics market: small or large, owned by individual entrepreneurs or holdings. Each company advertises and promotes its competitive advantages. But when the arguments are real “advantages” that affect the cost and speed of work, and when it’s just a marketing move in pursuit of the client? We offer you a brief tour of the world of logistics to dispel the illusions created by logistics operators
Myth 1. Having your own vehicle is guaranteed to reduce the time and cost of delivery
The classic logic of this statement is approximately the following: “If a company owns cars, it does not need to contact third-party organizations or adjust to their schedule. As a result, transportation takes less time. Delays are minimized. In addition, the cost of delivery is reduced, since it does not include renting someone else’s transport.”
This statement is true if you have one standard route or region of transportation, because road carriers choose to specialize in routes, countries of transportation or types of cargo. This is due to the need to obtain permits, such as international “permits” and the like.
If your geography is quite extensive, then most likely, a company with its own fleet will not be able or will not want to quickly adjust to you. The most customer-oriented organizations connect their partners, such as road carriers, who deliver goods on the route you need. Moreover, you may not even know that your cargo is being transported by a third-party subcontractor, unless you pay attention to the carrier’s details in the CMR bill of lading.
How do logistics operators work?
They have been forming a pool of trustworthy, trusted partners for years. Delivery from Europe has always been the main focus of international carriers. However, after the introduction of sanctions, cargo turnover in this direction decreased several times. Many carriers have ceased operations. The remaining ones value their reputation, so they try to build partnerships not only with customers, but also with freight forwarding organizations or aggregators, since the latter provide a stable amount of work.
This gives freight forwarders the following competitive advantages:
variety of road transport routes;
there is a high probability of picking up a car in a short time, since the client’s request goes to several organizations at once;
such organizations set high requirements for transport companies on delivery times, stipulate penalties for violations and all the nuances of the transportation process, which the client may not even know about. This makes it possible to get a better service;
freight forwarding companies are often larger customers for carriers than a single customer. Therefore, they are more likely to get a good discount from the initial price of transportation than the customer.
Thus, having your own fleet can provide advantages in terms of price and terms, but it is not a 100% guarantee of such.
Myth 2. A direct contract with the sea line guarantees lower rates for sea freight
Sea lines are often large foreign holding structures with several offices and branches that can be scattered around the world. Pricing policy in such organizations is usually determined by the head office. They can provide discounts for a large guaranteed volume of traffic.
By consolidating the cargo of their customers, freight forwarding companies form a volume that may be of interest to the line. Therefore, the opportunity to get a discount here is much greater than that of a single customer.
When working with sea lines, it is also necessary to take into account that a large structure makes the company less flexible and adaptive. In the event of a force majeure situation, an organization that has contracts with several sea lines can quickly change routes and distribute cargo depending on the situation in the ports and on the availability of container equipment at the lines.
Myth 3. The larger the freight forwarding company, the better service it provides
Of course, the scale of the organization that you trust to deliver your cargo matters. A small company with a staff of 3-10 people has much less financial and expert capacity to provide transportation services to a large number of destinations involving different types of transport.
But there is no absolute direct relationship between the scale and quality of the service. In large organizations, in the absence of a high degree of automation of their processes, there is a high probability of loss and distortion of information. Any, at first glance, the simplest transportation may contain a large number of nuances and features that may not be taken into account in a large company, where departments may physically be located in different cities and countries. This risk is eliminated in medium-and small-scale organizations where the client Manager can communicate personally with logisticians, customs clearance experts, and other specialists involved in the logistics chain.
Myth 4. It is more profitable to order transport and customs clearance separately from specialized specialized companies
Highly specialized organizations have expert competitive advantages in a very limited segment of services. This option is suitable for a client with the same narrow specialization. For example, there are forwarders that deliver goods to the ports of the Far East during customs clearance in Vladivostok. Such a company may offer good service and prices in this direction, but if you need to deliver the goods on a different route, you will have to look for a new forwarder and customs representative.
The majority of freight forwarding companies seek to diversify their product line in order to offer the client the most complete range of logistics and logistics services, such as certification, obtaining business solutions for the HS code, and others.
Due to the synergy effect, the cost of services of such organizations may be lower than that of several narrow-profile companies that you will build in the same logistics chain. In addition, you will have to constantly monitor the transfer of information and documents from one company to another, as it is very often in these areas that problems, errors and as a result delays in delivery and customs clearance of cargo occur.
Myth 5. If an organization offers registration under the EDS of a customs representative, it means that it has a license of a customs representative
Now the Declaration service is common, when the company-customs representative issues the EDS of its organization for a small fee to the declarant of the partner freight forwarding company. This is usually due to the fact that the volume of declared goods does not cover the costs of obtaining a license and issuing a Bank guarantee.
If you want to make sure that the freight forwarding company has its own license of a customs representative, you can check this information in the register posted on the website of the Federal customs service of the Russian Federation.
When choosing a freight forwarding company, in addition to external attributes and financial stability indicators, pay attention to:
responsiveness and transparency of responses to your requests;
completeness of expenses included in the bid for delivery of cargo along the entire route (this will save you from unexpected expenses on the way);
readiness of the organization to provide expert advice, information about the upcoming delivery and customs clearance of the cargo;
the presence of an expert staff sufficient to fulfill the application (it is worth doubting the quality of the service, if only one Manager is responsible for the entire process of delivery, certification, customs clearance and accounting document management);
willingness to provide a rational explanation, comments, if the bids are significantly lower than competitors;
the contract must clearly state the responsibilities of all parties;
providing daily up-to-date information about the progress of cargo delivery.