Ten things to consider when choosing a freight forwarder

Do your homework
Find out how the freight forwarder’s business operates. Is it a highly fluid company – or are there many hard and fast compliance rules in terms of customer relations? A highly fluid organisation can react quickly and doesn’t need to have decisions made by committees on each and every issue. Most issues are small and can be worked out early and with great ease.

Meet the team
Make an appointment and meet the freight forwarding team. These are the people who will be dealing with the project on a daily basis. Both parties need to know the other well enough so any problems or challenges can be worked out as a team. Many hands make light work!

Any concessions?
Sit down with the freight forwarder’s customs manager and go through your cargo list. There may be a number of concessions or exemptions for the project under existing Government concessions. This is vital, as an incorrect entry by a broker may cost the project thousands in revenue that may not have had to be paid. A good customs manager will be able to assist with this and all concessions.

Plan and exchange ideas
Work out a program with the project team leader but ensure everyone meets and exchanges ideas. It’s important that your program and expectations for delivery are clear. The forwarder can appoint an in-house team that can handle all expediting and keep the project team updated as to cargo readiness and
shipment dates.

Trial some shipments
Run a few trial shipments with the forwarder, to test their capabilities when it comes to time-critical shipments. Test shipments help you evaluate the forwarder, but also help the forwarder evaluate the client.

Establish clear reporting lines
Establish and communicate with all stakeholders on the reporting lines. If the forwarder doesn’t know your reporting lines it will only serve to make the project team’s job harder. The forwarder has the tools at their disposal; it’s just a case of the project team telling them what they need.

Agree on finance and payment terms – before you start
Sit down with the owner of the company and the head of finance to work out the payment schedule. This is vital, as like any other business it relates to cash flow. This is always the biggest stumbling block when it comes to a project. Projects can be costly and a good forwarder knows that the project team is responsible to shareholders and other stakeholders. As such, the forwarder should provide correct and precise billing including any and all relevant documents for payment approval.

Bring finance teams together
Ensure both companies’ financial teams meet, as this can be a point of contention when it comes to perceived payment schedules – personalities sometimes clash. A good way of avoiding this is for the finance teams to discuss their ideas and procedures. Every idea is a step closer to payment and client satisfaction.

Establish ground rules
Set the ground rules early so both parties understand what’s required. Draft the rules and regulations and have the parties sign off. Each company has a different set of terms and conditions and the projects
have very rigorous terms. Both parties need to negotiate these terms at the beginning and make sure
they have read and understood what is required.

Once signed, both parties have a cooling-off period of seven days in which to cancel or change portions of the contract. I recommend the parties meet their solicitors so that all areas are crystal clear from the start; as the French saying goes “Bon papier fait de bons amies” [translation: “Good paper makes good friends”].

Read and understand the T’s & C’s

Make sure all parties understand each other’s terms and conditions including the booking note for ships and aircrafts – along with specialised equipment. Both parties need to be fully aware of the responsibilities and liabilities under the Bill of Lading (BOL) and airway bill along with any heavy transport or specialised equipment hire. It can become expensive if something is not agreed upon or understood.
Shipping lines especially have very strict rules governing the vessel.

The BOL is a very powerful instrument that can tie the consignee or shipper into a number of heavy charges including detention demurrage; the clauses pertaining to these need to be fully understood by the client and the forwarder. Under the Australian Federation of International Forwarders’ terms, a forwarder must have their client sign off on the terms and conditions prior to any contract being entered into by either party.

Written by TGI Cargo

17 February 2023

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