Adding value

Staff -- Logistics Management, 8/1/2001

Freight forwarders, which don't operate their own planes and trucks as integrated carriers do, attract shippers' business by offering value-added services. As intermediaries between the shipper and the ocean and air carriers that actually move the cargo, they are responsible for the smooth, time-definite delivery of freight.

To compete against the likes of the integrated carriers, forwarders have carved out a niche by offering extras such as customs clearance, logistics management, information technology, and special-freight handling. Some work hand in hand with air carriers, while others assist the ocean liners in getting freight to and from the port. Many focus on particular foreign markets or specific commodities such as perishables or high-value goods.

Although many of its members focus on a particular niche, the forwarding industry has not been immune to the trend toward megamergers and consolidation. In fact, this industry segment has undergone a major reshaping in the aftermath of some mergers this year. EGL Global Logistics, for instance, acquired Circle International, while United Parcel Service picked up Fritz Cos. Switzerland's Kuehne & Nagel acquired U.S.-based USCO Logistics, a third-party distribution provider. In all cases, the acquisitions should result in the availability of single-source integrated solutions for shippers looking for a broader array of forwarding as well as third-party services.

The market turmoil notwithstanding, our readers continued to hand out numerous awards for excellence. This year, 10 forwarders received kudos from our readers compared with only five last year. Earning the gold were USF Worldwide (Seko), AIT Worldwide, Kintetsu World Express, Schenker International, Pilot Air Freight, Lynden Air Freight, Nippon Express USA, Exel (MSAS), EGL Global Logistics, and Kuehne & Nagel.

Although the number of winners increased this past year, the overall composite customer satisfaction score for ocean and air forwarders dropped from 32.26 to 31.97. Ratings were down in three of the five categories measured, indicating that shippers expect higher levels of service. Information technology was one category where the grade rose, going from 3.91 to 4.10. The customer service score also rose, from 6.99 to 7.12.

By contrast, the on-time performance mark dropped from 10.40 to 9.91. The value quotient dipped marginally, from 7.20 to 7.18. And the equipment and operations score stumbled from 3.75 to 3.65.

Freight Forwarders

Freight Forwarders	On-time performance	Value	Information technology	Customer service	Equipment & operations	Weighted score
USF Worldwide (Seko)	10.83	7.86	4.13	8.56	3.73	35.11
AIT Worldwide	10.66	7.69	4.11	7.99	3.87	34.33
Kintetsu World Express	10.50	7.87	4.24	7.45	3.72	33.78
Schenker International	10.43	7.32	4.56	7.65	3.80	33.77
Pilot Air Freight	10.26	7.55	4.30	7.92	3.61	33.64
Lynden Air Freight	10.50	7.48	4.42	7.39	3.76	33.54
Nippon Express USA Inc.	10.53	7.25	4.00	7.06	3.75	32.59
Exel (MSAS)	9.77	7.20	4.06	7.45	3.66	32.13
EGL Global Logistics	10.06	7.54	3.87	6.91	3.73	32.11
Kuehne & Nagel	10.14	7.04	4.00	7.12	3.67	31.98
Average	9.91	7.18	4.10	7.12	3.65	31.97
All scores are weighted. Weighted scores are determined by multiplying the average raw scores by the average weighted importance of each attribute (1=least important; 5=most important). To find the attributed weights for this category, see the table titled “Performance Attributes’ Importance Ranked by Mode” in the introduction to the Quest for Quality report.