In this episode, I’m going to give you some insights into freight forwarders world and give you some tips on how to ask the right questions so you could possibly find a great forwarder to help with your business. Let’s get started.
Welcome to the GoodLife Warrior podcast. I’m Yuping. We make sourcing easy, fun, and profitable for your business. This episode was originally aired as a video on my YouTube channel, youtube.com/goodlifewarrior. As always, high-quality, professional sourcing content delivered to you with passion and my unique Chinese accent. Enjoy.
Hello, beautiful sourcing warriors. How’s your day? I hope your day is going well. We all know that the shipping cost is a big part of our total cost. Sometimes the shipping cost alone is more than our product cost.
We’re all wanting to find a great freight forwarder to help us minimize the shipping cost so we can get more profit. So in this episode, I’m going to give you some insights into freight forwarders world and give you some tips on how to ask the right questions so you could possibly find a great forwarder to help with your business. Let’s get started.
Do you know me already? Just in case you don’t know, I’m Yuping. This is the place to be if you’re really wanting to learn to source the right way. People spend thousands of dollars buying products, it is so important that we get this part right. I have been doing sourcing for almost 20 years. I wanted to share what I know with you, and I want to share it in the most positive way so you feel empowered that you can run your business and make money. Now let’s get back to our freight forwarder subject. There are three things you need to know about the freight forwarding business in general before you ask specific questions regarding your shipping quote. The number one question is, how does the freight forwarder make money? Freight forwarders are service providers. The companies don’t actually own any equipment such as an actual airplane or ocean ship.
They provide only the service to you to help you arrange your product, pick it up from point A and deliver it to point B. How they make money? They negotiate a discount rate with the carriers who own the actual equipment, such as an airline or the ocean container shipping company. For example, you ask your freight forwarder to give you a quote to air freight a small box of products from China to the United States. In the quote they may specify the airline is China Air, the rate your freight forwarder gave it to you, already included their margin added to the pre-negotiated discount rate from China Air to them. The same thing applying to the shipping rate they give it to you, your freight forwarder already negotiated with the ocean container shipping company such as Maersk or Costco, they have a special rate and they add their margin to your quote. How much discount your freight forwarder can get from either air carriers or ocean carriers, all depends on their volume.
This leads to the second thing you need to know, the special lane. What is a special lane? Special lane is the lane that your freight forwarder is so strong at it that their rate is so aggressive. For example, Savino Del Bene is a freight forwarder that I used to work with, their Italian lane it’s so strong because every single bottle of olive oil to Costco in the United States, is moved by Savino. They have huge leverage when they negotiated with the container shipping company to get a discount rate and therefore they can get aggressive with the quote that they provide to you. In general, freight forwarding business is a thin margin, volume-driven business. Large companies on the top dominates, DSV, Savino Del Bene, C.H. Robinson, these companies negotiate a very aggressive rate with the carriers. This leads to the question, how does the small freight forwarding business make money?
That’s the number three things you need to know, partnership and network. Let me give you an example. I used a US-based freight forwarder called Priority to pick up my shipment from China to the United States. In China, a company called Honour Lane contacted my Chinese supplier, who is Honour Lane? Honour Lane is Priority’s Chinese counterpart, they’re partners. Big brands, such as DSVC, C.H. Robinson, Kuehne+Nagel, Savino, there are so many on the top. They own their direct offices in different countries. But small freight forwarders, operate through partnerships and affiliation. This gives them collective power to compete with the large freight forwarding companies. I wanted to share this with you because I don’t want you to be surprised when you ask a freight forwarder to give you a quote, a different company picks up your shipment. Now you know a little bit of freight forwarding business, let’s get back to your freight forwarder and your quote.
My tips to you, number one is, know how to qualify a Chinese freight forwarder. If you post one message in the Facebook group, you’re going to see so many hands raise up and say, “I can help you. I can help you move your product from China to your country.” Well, the question is, can you trust the Chinese freight forwarders? If so, how do you qualify them? Of course, there are pros and cons in doing everything, including using a Chinese freight forwarder. On one hand, you’re debating, should I use a local freight forwarding company? At least I know their office is right there, there’s a phone number I can call to verify my shipment. On the other hand, the Chinese company is giving me a very good rate that can save me a couple of hundred dollars.
Should I trust this Chinese company? Let me give you some feedback. There are four things you can do. Number one, social proof. Number two, website. Number three, business license, and number four payment verification. Quickly explain. Social proof, how did you get to know this freight forwarding company to begin with? Do they have a salesperson hanging out on one particular Facebook? Search their name and see if they have been providing value to the community. How long they have been there. It will give you an idea if this company is trustworthy. And then you’ll go onto their official website, if you couldn’t even find a website, that’s a no-no sign. Number three is the business license. As far as the business is concerned, this company could be just two or three people. So ask them to provide you the business license, a copy of the image is fine.
And number four is, most likely this company is going to ask you to prepay your shipping cost. If that’s the case, make sure you verify the wire transfer instruction the company specified on the performer invoice matches the company name. Do these verification steps to qualify the Chinese freight forwarder. Tip number two is, know how to compare quotes. If the Chinese freight forwarder’s quote is $300 cheaper than your local freight forwarder’s quote, that’s great. But you need to ask yourself, is this the same quote? Remember we talk about partnership and affiliation, does this Chinese freight forwarder has affiliate offices or partnership offices in the destination country to do the final clearance and the delivery? We want to make sure we don’t just look at the total amount on their quote. We need to read the fine lines, making sure that the quote is apple to apple. Tip number three, know your S-H-I-T.
What is that? You can spell it out. My point is you need to act like a pro when you ask for a quote for your shipping. All of the carton weight and dimensions, pick-up address, shipping terms, all of this information need to be included in the request. The more times you go back and forth, back and forth with your freight forwarder to clarify what you need, the more they will find out that you don’t know anything about shipping. This could affect your rate and even their willingness to work with you. This has happened before, actually happened so many times, some of the freight forwarders just downright don’t want to tell work with some people because they don’t know anything about it and they act so needy. So that’s why in the sourcing warriors training course, I provide the specific template for the students to use so they don’t go back and forth with the freight forwarder and get the bad rates and bad treatment.
Now let’s quickly summarize. The freight forwarder makes money through? Special discounts and they can even get better pricing through special lanes. The small freight forwarders, work collectively to get some advantage. If you are concerned about the Chinese freight forwarder‘s legality, make sure you do social proof, website, business license, and wire transfer payment verification. When you do compare the quotes, make sure it is apple to apple. Don’t miss out on certain things, end up having to pay more money. Finally, make sure you take control of the entire process by acting like a pro. If you haven’t started to take my sourcing warriors training, I encourage you to do so. I’m here to help you and support you and I wish you a great day. I’ll see you in the next episode.
Check out the link, the Sourcing Warrior Mastermind link, undertake Sourcing Warrior’s quiz to find out your sourcing IQ. Make it fun, learn something, have a great day. I’ll see you in the next episode.