How to Choose a Freight Forwarder in China

When setting up a manufacturing business in China there are many challenges to master, and shipping shouldn't have to be one of these. To ensure that the materials your company needs for production arrive on time and that products are shipped out efficiently, manufacturers should outsource their shipping processes to a freight forwarding partner. This week, Sebastian Tschackert of Wako Logistics, part of the US based WLG Inc explains how to choose the right freight forwarder to meet your needs.

Shipping from China can be a complex challenge to new manufacturing companies in China. However, in recent years many experienced freight forwarding companies have established operations in China, so no one has to face these issues alone. By selecting an experienced freight forwarding partner, manufacturers can free themselves from dealing with China's customs codes and import/export laws and focus on managing their core operations.

By understanding what freight forwarders do, and knowing what questions to ask before choosing a freight forwarding partner, manufacturers can reduce their shipping and customs related costs, while being able to devote more time to their customers and their manufacturing operations.

Know the Steps in the Shipping

Process Shipping from China can be split into many small steps with a surprisingly large number of interactions between the parties involved. The following graphic illustrates the process for an average sea freight shipment from eastern China to Europe.

As highlighted in the graphic, manufacturers can expect approximately 12-15 different parties to be involved in the process, with documentation and direct communication required at each step. Given the management intensive nature of the process, as well as the relationships and specialised knowledge required to manage this efficiently, most companies would struggle to manage these procedures as effectively as a freight forwarding company can, especially when you consider that these are the tasks that freight forwarders perform every day.

It is because of the complexity of the shipping process that most manufacturers in China prefer to selecting one or two service providers (freight forwarders in this case), capable of organizing the entire shipping process from door to door. By choosing this option, companies are not only better able to focus on their core businesses, but are also able to reduce their costs and increase the flexibility of their operations by utilizing the scale of the freight forwarders' networks and buying power.

Services Provided by Freight Forwarders

Before giving any advice on how to find the right freight forwarder to fulfill your company's needs, we should define what services freight forwarders typically provide and where they fit into the supply chain.

What a Freight Forwarder Is

An international freight forwarder is an individual or company that books or otherwise arranges space for shipments between countries via common carriers.

What Freight Forwarders Do

Simply speaking, freight forwarders do not ship cargo themselves but instead arrange for its carriage by others. However, as discussed above, making these arrangements can be a complicated business, especially when shipping internationally over long distances. So to do their jobs effectively, freight forwarders also prepare and process the documentation and perform related activities pertaining to client shipments. Some of the typical documentation reviewed by a freight forwarder include commercial invoices, shipper's export declarations, and other documents required by the carrier or country of export, import, or transshipment. When handling shipments on behalf of a client, the `forwarding' company takes on prime responsibility for the entire transport operation, specified in each contract, for a charge or fee, which covers the total transport operation and in turn, pays the actual carriers for the transport services rendered to it.

SWOT Analysis of Working with a Forwarder

Criteria for Selecting a Freight Forwarder

Now that you have decided to partner with a freight forwarder for managing your company's shipping needs, you still need to choose one. Most major forwarders are now represented in China, which can mean choosing from many potential partners, however, by establishing the right selection criteria, you should be able to find the best partner to fulfill your business needs.

General Criteria

Global coverage and local expertise Does the potential partner have their own offices and coverage in your sourcing markets as well as in your home area? And, do they have the necessary experience in moving freight between those two locations?

Client References from Your Industry

Can the provider demonstrate know-how in your industry, for example, knowing the specifics in customs clearance, etc.?

Breadth of Product Portfolio

Can you rely on this partner to make best use of the different transport modes available (such as ocean and air freight) as well as providing additional value-added supply chain services if needed?

In-house Consolidation Services

As you may not always be shipping full containers in the early stages, look for a comprehensive consolidation service in which the provider can consolidate small shipments from various parties and hence can pass a cost advantage to you.

China Specific Criteria

China Experience and Skills

Does the provider have a proven track record in shipping from China and can they show expertise relevant to China?

Language Abilities

If you have expatriate staff who need to interact with the forwarder, then ensure that the forwarder has a team capable of working with your staff in their mother tongue.

Long Term View

Many businesses in China are able to survive by continually finding new customers and do not focus on giving the kind of service that sustains long-term relationships. In reviewing customer references, we recommend you pay particular attention to the average length of time that the forwarder has worked with each client.

Points of Contact at Your Destinations

Does the forwarder's network include offices in your most common shipping destinations? Making sure that your customers receive your products smoothly can be a big plus.

Starting Your Selection Process

In order to kick-off the process we would recommend you follow a few simple steps in order to get the right information and an in-depth impression of the candidates available.

Make Your Own List

Select a few potential candidates that appear to meet your needs. Information on the major forwarding companies active in China should be easy to find on the web, and you should ask your business contacts for referrals.

Meet Face to Face

In the next step you may want to invite those potentials to send a representative to your office in your hometown for an initial discussion. Within this meeting you may want to ask the representative to give you a basic introduction of their setup as well as scope of services in relation with China. Asking for reference customers out of your industry/business field is an absolute must and should be answered promptly. Additionally, you may want to provide the cornerstones of your business and planned projects so the representative can give you first hand comments and suggestions on this. This should also specifically be focused around potential risks and/or pitfalls.

Compare Services and Quotes

As a final step, you should collect rates and prices for the requested service and benchmark the service portfolio, your personal impression and the given rates between the potential providers in order to make your final decision. While service pricing is important, you should be careful to look for a professional provider who can help you save management time and ensure the smooth operation of your supply chain.

Now you are ready to start shipping more efficiently in China, without having to spend a decade learning a whole new industry.

Sebastian Tschackert, Vice President Europe for Wako Logistics Group has over 11 years professional experience in the freight forwarding industry, including more than six years dealing extensively with China.

Wako Logistics now has 15 offices in China and provides a full range of competitive transportation and logistics services, supported by premier IT capabilities and industry leadership in customs brokerage, regulatory compliance, and security.