Subscribe to our free, weekly email newsletter!


Freight Forwarding: Choosing the best partner

With President Obama continuing to emphasize exports, specialized shipping intermediaries are more important than ever to global logistics operations. But how do shippers identify and choose the right freight forwarder?
By Patrick Burnson, Executive Editor
May 01, 2011

Lost in all the recent discussion of what differentiates a 3PL from a 4PL, comes the question: Whither the common freight forwarder? Once charged with simply arranging the movement of goods through Customs clearance, the role remains in what some experts call “deeper shades of grey.”

“Third- and fourth-party logistics providers are always freight forwarders,” says Shay Scott, director of the Global Supply Chain Institute (GSCI) at The University of Tennessee. “But it’s never the other way around.”

Nor should it be, he adds. Given that not every shipper faces the complexity of penetrating a new global market or extending its existing supply chain across vast “borderless” regions. “A lot of logisticians are taking issue with economists who say the world is flat,” he says. “We know that globalization has been vastly exaggerated, and that relying on a ‘mega-forwarder’ is not always the distribution answer.”

Shay points to the work of Pankaj Ghemawat, of IESE Business School in Spain, who recently authored the book, World 3.0. In it, he notes that the number of American companies with any foreign operations is vastly overstated, and that exports remain a relatively small part of GDP.

“So while some Fortune 500 companies really do need a Fedex Trade Network, or UPS Logistics, or a Penske, many other U.S. exporters only require a basic forwarder,” says Shay.

But that doesn’t keep forwarders from over-promising on their services, he adds.

“Thirty years ago, a small trucker would call itself a freight forwarder,” Shay says. “Then they’d build a warehouse and call themselves a 3PL. And if that worked, they’d offer consulting and call themselves a 4PL. It’s all become rather confusing…and often unnecessary.”

What is necessary, however, is finding the right forwarder for “niche” shipping, says Shay. He notes that U.S. companies doing business in Mexico, for example, might be better off with a small forwarder located near the border. The same holds true for shippers of specialized commodities like pharmaceuticals or hazardous materials.

“The shipper’s focus should not be on the country he’s trying to enter, but the port of entry,” says Shay. “And many of the smaller forwarders have better relationships with Customs at these stations than the bigger players.”

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Supply chain security provider Freightwatch International has released its semi-annual report on cargo theft in the Asia Pacific region for the first half of 2014, which contains some heartening news for U.S. shippers reliant on trucking, warehousing and retail.

FedEx Ground, a subsidiary of FedEx Corporation, reports today that a decision by a three-judge panel of the United States Court of Appeals for the Ninth Circuit reversed previous rulings by the District Court for the Northern District of Indiana in three class action cases involving mostly former independent contractors for FedEx Ground

More talking remains before the deal is done

The transpacific U.S.-flag carrier has been ranked number one in the ocean carrier category for Logistics Management magazine's Quest for Quality award

This year, the Containerization & Intermodal Institute (CII) will be staging the “Connie” Awards dinner in conjunction with IANA’s Intermodal EXPO in Long Beach

Comments

Post a comment
Commenting is not available in this channel entry.