How to avoid communication breakdowns [Page 2]
-- Logistics Management, 4/1/2006
Page 2 of 3 -- If a long-term relationship is the objective, both parties must represent their positions on rates and payments fairly and candidly. The forwarder should be making a profit, not a killing. At the same time, the shipper should be providing complete and accurate data, not holding back information in the hope of getting a lower rate. The aim is for the forwarder to be fairly compensated and the shipper to get the most economical, accurate rates.
Shippers want to know exactly what those rates cover. "The forwarder's quote should be all-inclusive, without any hidden surcharges, insurance coverage add-ons, or packaging costs," says Bob Pettigrew, import-export director at Fuji Photo Film Inc., in Greenwood, S.C.
Once an agreement has been reached, it's wise to confirm it in writing so that both parties' expectations are clear. "In my 40 years in the industry, my basic rule has been that when spoken communications are backed up with written communications, virtually all misunderstandings are cleared up," says Billy App, president of J.W. Allen & Co. Inc. in New Orleans and chairman of the freight forwarding committee of the National Customs Brokers and Forwarders Association of America.
Case agrees. "Expectations have to be written down so that there are no surprises on either side. If it hasn't been written, it hasn't been said."
The Work-in-Progress Stage
Even after a relationship has been established, there's still a need for clear and frequent communication. The optimum arrangement during this stage is for the shipper to have a knowledgeable, dedicated staff member regularly communicating with a freight forwarder counterpart.
Both parties also concur that the right players on each side need to do the talking. "You have to get the operations guys together right away so there is no misunderstanding as to what the shipper needs and what the forwarder can provide," warns Case at Camelot. "Salesmen and executives don't know these things—operations people do."
Once communication links have been established, the shipper needs to convey some basic information to the forwarder. Often, though, not enough information is offered—and not enough questions are asked. "A surprising number of shippers fail to provide all of the necessary consignee information, including regular and emergency phone numbers where a live person can be reached, as well as contact names, and an equal number of forwarders fail to ask for this," says Paul Eitmant, CEO of consulting firm IP Group in Scottsdale, Ariz., and former vice president of international sales for a manufacturer of electrical equipment. "If things get off-track, the forwarder then has to call the shipper to get the information, and more time is lost," he notes.
Eitmant believes that a single, standardized form for conveying information to freight forwarders would improve communication. "If a shipper has four forwarders, he has four forms. Some are professional and comprehensive, some are perfunctory and pro forma," he says. "Without a standard form, there will continue to be too much lost time, lost money, and lost cargo."
Beyond those basics, the forwarder needs information about such additional considerations as export licensing, billing and ancillary documentation, hazardous materials classifications, and special handling requirements. In some cases they may even need to know particulars of the consignee's physical layout.
"The forwarder has to have complete information about the consignee's location, particularly when delivering a high-value product," cautions Mike Entzminger, CEO of freight forwarder Mach 1 Air Services Inc. in Tempe, Ariz. "We once had to deliver $750,000 worth of computer racks to the seventeenth floor of a midtown office building," he relates. "Just think about the time loss, the added costs, and the frustration involved in locating lifting equipment in a situation like that."
The Maintenance Stage
For a shipper-forwarder relationship to keep working smoothly, two-way communication must continue unabated. Shippers need to continue providing detailed shipment information to their forwarders; they in turn need to provide updated shipment-tracking data through their websites or via electronic data interchange (EDI) as well as alerts about actual and potential problems. Continued...
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