Like you, many importers and exporters in Australia question whether they should outsource their freight forwarding business to an international freight company or manage it in-house. According to the 2014 3PL Study, 62% of shippers outsource their freight forwarding to international freight companies, while 73% outsource their warehousing to 3PL providers. The decision on what will be best for your company now and in the future needs to be evaluated carefully. To assist, we have created the below list of 6 questions.
Your answers to these 6 questions can help you decide between the choice of outsourcing to international freight companies or managing it with your own team.
1) Are you mostly trading globally?
Trading globally brings its own complexities and specific requirements which may become difficult to fulfil with your in-house team. Finding all the required answers may be time consuming and a lack of experience and expertise may bring with it more risk to the smooth flow of operations. With international freight companies, you have their whole organisational experience and expertise available to you and there is no need to worry about where you want to trade globally today and in the future.
2) Do your incoterms require international expertise?
Do you import to or export from Sydney, Melbourne, Brisbane, Perth or Adelaide to or from Qingdao, Shanghai, Ningbo or any other city in China? The Incoterms used for moving freight can be complex when you are trading globally and any misunderstanding of these terms brings huge risk if anything goes wrong during the freight movement. International freight companies have acquired this understanding over the years and can easily manage the freight according to the Incoterms decided whether EXW, FCA, FOB, CIF, DDU, DAP etc. The knowledge and expertise provided by international freight companies can assist you with the seamless operation of your freight, irrespective of your Incoterms.
3) Do you have sufficient volumes to get the most competitive deal?
Freight costs like any other business determine the price and the space advantage that you are able to command. Higher freight volumes give you power to negotiate better rates with the carrier and secure space commitments for smoother supply chain operations. International freight companies combine volumes from their different customers to secure competitive rates and pass on the benefits to their customers thus giving you what you would not have been able to secure on your own.
4) Does it make sense to hire costly freight forwarding talent and build your own team?
Freight forwarding talent is scarce and costly, and there are few people with the much needed experience and they cost a lot. Building a freight forwarding team to manage your freight in-house brings the additional challenge of managing an additional set of co-workers. Further, with seasonal volumes, you may have an excess or shortage of people working in your freight forwarding team. On the other hand, with international freight companies, you can work with them as a partner and treat them like your own extended team. This brings not only real global experience and exposure for your business, but you also get the much needed flexibility with volume variation over the year. And yes, if you still need someone to be sitting in your office helping you with your work, an international freight company can provide you with on-site representatives.
5) Do you need versatility?
International freight companies bring more service versatility to your freight forwarding movements. An international freight company can organise door deliveries, door pick up, dunnage removal and appointment deliveries more efficiently. In addition, international freight companies are always ready to assist you whether you move freight internationally or domestically.
6) Do you need warehousing services, domestically or internationally?
Customer satisfaction and availability on shelves has made warehousing close to the market where you sell an important choice for exporters and importers. Being close to the market means you can make products available faster and hence ensure higher sales. International freight companies have recognised this need and have capabilities either themselves or through their global network to give you the choice of storing your products closer to origin or closer to your markets. When an international freight company becomes an extension of your business, they will find solutions to continuously improve your overall supply chain.
Many questions need to be answered when you are deciding to manage your freight forwarding in-house or to outsource to an international freight forwarder. In summary, consider that you will need substantial freight volumes for better rate negotiations, overseas logistics partners for better supply chain control, global expertise and knowledge to meet your deadlines and time to source and manage the freight talent if you build your own team. Additionally, if you have requirements for warehousing, transportation and distribution, your needs may make it imperative to engage a third party logistics (3PL) partner.
For more than a century, BCR has continued to help small, medium and large businesses achieve an optimum logistics solution with warehousing and transportation, including air freight and sea freight services to and from the major ports including Brisbane, Sydney, Melbourne, Adelaide and Fremantle (Perth).