Once upon a time, a freight forwarder was invested with the straightforward task of transporting customer cargo to its port of destination as quickly and trouble-free as possible. But so much has changed over the decades that forwarders now face a choice: either stick to the old-school Transactional Forwarding philosophy or embrace the new Conceptual Forwarding philosophy.
International Cargo Express has chosen the latter, and for some very good reasons. It’s not just about increasing our competitiveness in an industry famous for its level of competition, it also means providing real savings to our customers and developing further the working relationship we value so much.
But, what is the difference between these forms of forwarding? And how do they affect the cost-efficiency of freight forwarding services?
Understanding Transactional Forwarding
Transactional forwarding is offered by freight forwarders that focus on securing the lowest container rates possible from shipping lines or airlines on any particular day.
Basically, forwarders are price-givers and not price-setters, so we tend to get similar freight rates for the same transportation service providers, and as a result, see our margins squeezed by sheer competition. But concentrating on getting low rates has its limitations for everyone.
Understandably, customers will compare the rates quoted to them and choose the one that seems to be the best deal. But all too often, the difference between one option and another is very small and customers are not aware that there are other expenses to consider too. So, a lower container rate itself does not guarantee savings overall.
Understanding Conceptual Forwarding
Conceptual forwarding is where the freight forwarder focuses on more than simply the latest container rates. Instead, all the individual elements of the supply chain are examined to find a cost-saving solution that suits that specific customer.
Forwarders are essentially the architects of the transport chain because they have the experience and expertise to identify the areas where real savings can be made, and choose the best options for their customer based on their unique needs. This includes:
- choosing the right mode of transport
- choosing the right frequency of charges
- maximising the benefits of consolidation
- offering distribution services at point of origin or destination
In essence, the overall concept of the forwarding service is looked at, and in this way, the forwarders take care of the interests of their customers. The result is that customers get a better overall quality of service.
Why Transactional Forwarding Is No Longer Enough
Most customers ask for a quote and then compare it to what they have been paying – or think they have been paying. But because freight forwarding is ambiguous, there can be multiple transport solutions to getting any cargo to its destination. Unless the cost comparison between these solutions is done thoroughly, customers will always lose out.
For example, a container rate out of Europe can vary by as much as €200 per box. This is usually because different shipping lines set their own margins on each of the 13 charge codes that are applied. The trick to securing real savings is to ascertain where the differences lie, and this means examining the entire supply chain.
Many customers tend to make the wrong decisions, slowing down the supply chain and making it more expensive. But getting the different elements right is the key to generating saving, so a freight forwarder offering a Conceptual Forwarding Service is a better option for importers and exporters.
What ICE Is Offering
International Cargo Express has been tailoring solutions for individual customers for the past 25 years. Large multinationals offer generic solutions, but they are not always suited to the importers and exporters using them. This is especially true with Australian companies, where over 90% of companies are small or medium-sized enterprises.
We want to offer more to our customers and not be simply a price-giver. By looking at the entire supply chain, we can ensure that our customer saves money. Our staff are experts in their respective fields and so are extremely well positioned to identify the ways in which our customers can reduce costs.
For further details about how our Conceptual Forwarding Services can benefit your business, just contact the ICE Team. We’re always glad to talk to answer whatever questions you might have.
