Once upon a time—only a decade or so ago—the shipper-freight forwarder dialogue was all about getting the lowest rates. The freight forwarder was perceived to be the power player in the relationship, negotiating deals with carriers and shopping prices around the marketplace.

But times have changed. As businesses have globalized, supply chain management has become more strategically important to their success. Accordingly, shippers are looking for much higher standards of performance from their international logistics partners, and their attitudes toward accountability have become more exacting.

"The shipper's service requirements have definitely changed, and the game is now escalating," confirms Claude Germain, executive vice president and chief operating officer for freight forwarder Schenker of Canada, Ltd. in Toronto. "We are much more engaged in quality issues and have to pay more attention to the key variables of the shipper's business, such as inventory and transit times, exceptions, and costs and routing," he says. "A good forwarder should be able to meet this challenge, bringing to the equation the ability to arbitrage its purchasing power and to optimally configure the delivery of the shipper's product."

In this new world of global supply chain challenges, how can shippers make sure they work most effectively with their freight forwarders? They can start by choosing the right service providers, then follow up by making sure both parties are on the same page when it comes to service expectations.

Finding the right freight forwarder has a lot to do with the selection process. Before inquiring about forwarders' capabilities and costs (usually through a formal request for proposal, or RFP), shippers have to articulate their own needs, says Saron Hines, strategic sourcing manager at Boston Scientific Corp. in Natick, Mass.

Once they understand what those needs are, shippers can evaluate how well individual candidates might fulfill them. What to look for? Steven Greenberg, executive vice president of freight forwarder SEKO Worldwide LLC in Itasca, Ill., suggests choosing a forwarder that offers global service and can provide a variety of transportation options through its contracts with established carriers.

In many cases, though, shippers will want to look beyond such clear-cut issues as price and focus on more subjective factors. "Be very suspicious of a low rate," cautions Tony Dugdale, director of worldwide logistics for

International Rectifier in El Segundo, Calif. "It's probably not sustainable and will lead to issues long-term. Rather, make sure the forwarder's culture and strategy align with yours, and especially look for innovative ideas and at the resource pool of talent they have within their organization," he advises.

Choosing the right freight forwarder may require getting out of the office and seeing what's behind the marketing brochures. "Visit the forwarder's operations," recommends Jack H. Daniel, Jr., president of International Forwarders Inc. in Charleston, S.C. "Meet with management and understand their philosophy, but of equal importance, go out and meet with the people in the operation who are involved with the day-to-day traffic and documentation work."

Once they've chosen their freight forwarders, shippers' next challenge is to make sure both partners clearly understand the demarcation of responsibilities, and that both have realistic expectations.

"If a shipper thinks that once the contract is awarded, the forwarder simply takes over, deep disappointment lies ahead," says Hines. "The shipper has responsibility for establishing the overall goals for transportation and logistics and is the ultimate decisionmaker. But the shipper also has the responsibility to make sure the forwarder understands the limits of its authority and that the processes and procedures are in place to drive their mutual activities to service the customer."

To make that happen, Boston Scientific encourages its freight forwarders to participate in the shipper's strategic transportation planning. Forwarders attend routine business reviews and travel with company personnel to offshore locations for consultation on new manufacturing facilities or transportation arrangements. Continued...

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