As The Globe Spins

SOME SALIENT SUPPORT FOR YESTERDAY'S POST

According to this article...

"According to the shippers we surveyed, they rated proactive notification of problems with a shipment as their most important aspect of customer service from the forwarder. However, most forwarders were scored by the shippers as 'less than acceptable' in this key service attribute,"

"Despite the many millions invested in technology, it also seems that the flow of information between supply chain partners is still less than optimal."

And you thought I was sniffing glue when I said price isn't the most important consideration when selecting a forwarder. Well, I'm not the only one inhaling...

Transport Intelligence found that shippers rate proactive problem notification as the most important service requirement from a forwarder, over and above reliability, with track and trace capability also in the top three services attributes looked for by a shipper. Again, pricing came in at fourth in the shipper requirement ratings.

And here's another dirty secret of international freight. You have no control over anything. None. Nada. Zip. Zilch. Worse, neither do your forwarders. When things go wrong, they go very, very wrong.

"Although forwarders have to rely to a large extent on the performance of their carriers, the survey strongly suggests that when things do go wrong they still need to be more proactive in informing their customers."

AND THEY SAY A GOOD MAN IS HARD TO FIND

I used to have a long list of advice for people when it came to selecting a freight forwarder, but over the years, my advice has boiled down to this:

A freight forwarder is only as good as the people who work for them.

Based on the saleperson's visit, you can't tell who is going to do a good job. The only way to see if a forwarder fits your needs is to do a shipment with them.

Ideally, a small, not-so-important shipment and then you evaluate them on their service.

Does the ocean or air person call you back promptly?

Are they organized (i.e. they don't lose your paperwork or go on vacation without shipping your container)?

Is their paperwork correct?

Do they actually do what you ask and need them to do?

Are they proactive and able to problem solve? If there is a problem, do they come to the table with solutions?

Or are they burned out? Grouchy on the phone? Unresponsive?

Forwarding is a rough and tumble business with a high turnover rate. Freight salespeople and managers have little-to-none job specific training and the pay is low with long hours (How often do you work until midnight? Forwarders do it all the time). Freight Forwarders don't always develop or support their staff as they should, you either learn on the job, or you get out of the industry. The prevailing management style is punitive, which means lying is not uncommon. Weaseling is almost a given. Backstabbing aims to kill. In short, forwarding is a very small, rumor-filled world and extreme functional dysfunction is the norm.

It doesn't matter if a forwarder is ISO certified with a multinational network, because, if their staff is difficult to work with, that international network or shiny ISO certificate isn't going to do you one lick of good. It's theory versus reality. Promise versus practice. You can't evaluate a forwarder on their credentials or sales visit alone. You have to see them in action to know whether or not they can deliver on their promises.

But what about cost? Shouldn't a forwarder be chosen based on cost?

Yes.

And no.

It depends.

There is more than the cost of the freight involved here. There is the cost of the process, of the chain of events that must occur for freight to arrive successfully overseas. If one of those links in the chain fail at any point in the transport of your goods, it will cost you, sometimes much more than the freight cost. I've witnessed some spectacular shipping messes where going with the cheapest freight rate cost a company over a $100,000 in lost sales. All for a $300 savings on the container rate.

While it is always prudent to ask for freight quotes, freight cost alone should not be your only decision-making tool.

The best forwarder fits your needs at a competitive price. Not the cheapest price, but not the most expensive either. The best price really has nothing to do with money. My definition of best price is the dollar amount that gets the freight to the customer on time, with accurate documents, and without any unnecessary delays or fines. The best shipments are always the ones where the freight arrives.

Sometimes companies only look at the cost of a container and fail to incorporate the 'soft' costs of the international shipping. A few of my international buddies are frustrated right now with their management who, having no international expertise, have selected forwarders based on container cost alone. Management is looking at the bottom line and not realizing that poor service is costing them on the back end and eating up any savings they may have negotiated on the front end.

Cheap freight becomes very expensive if there is no service to back up the cheap rate. Unfortunately, that is a truth most companies learn the hard way.

Okay so now that you know cheaper isn't better and that service is more important than price, how do you find a forwarder?

This should get you started--Top Ten Forwarders of 2006

You should also attend IFA events where you can met many forwarders in a social setting and get a feel for who you might work well with.

Even if you think you've found your freight 'soulmate,' it's a good idea to continue to meet with other forwarders and keep the channels of communication open. Forwarder burnout is a very real danger to your supply chain. If your key contact crashes and burns, you're freight is going to be s.o.l. So it's always good to have a backup plan.

SALESPEOPLE ONLY SELL A SMILE

For the most part I find forwarder/courier sales calls to be useless. The sales staff are nice and pleasant and reassuring right up until something goes wrong. Then they don't call back or prove to have to no ability to rectify what has gone wrong.

To be fair, their ineffectiveness isn't all their fault. It's hard to rehabilitate freight once it's gone bad. There are third, fourth, fifth, even sixth parties involved and the forwarder rarely has any direct control over what a steamship line, union, or a rail yard does.

But they seem to have difficulty controlling things they should be able to impact.  Like their own staff and processes. Ocean department not following the instructions I gave them?  Don't expect any help from the salesperson. Accounting trying to collect money as if I am a turnip and they want blood? The salesperson won't know anything about it. Their job is to look good, smile nice, pass out free pens and pay for the occasional lunch while pretending their company is perfect. That's it. That's all they do.

Are there exceptions to this? I would hope so, but I haven't met them yet.

So I am always leery of forwarder sales calls. They all want to meet me, shake my hand, look me square in the eye, and then disappear the second somebody bungles my freight.

I recently had severe accounting issues with a major courier, let's call them FedUp. Their accounting department literally hounded me, blitzing me with bills in quintuplicate and phone calls. 80% of the time they were trying to collect on bills I'd already paid--I was doing their work for them, reconciling their internal acounts because for whatever reason they could not manage it themselves. Yet despite blatant evidence of their flawed process, this company still threatened to close my account because I was 'past due.'

I don't respond well to threats based on someone else's incompetence.

I informed the sales reps that I didn't have time to be their accountant and that they needed to figure out what the root cause was on their end and fix it a.s.a.p. Their response? Let's do lunch.  I tried again, but all I ever got were vague promises to take me to lunch.

I didn't want to go to lunch. I didn't need another notepad/pen/stuffed animal/widget with logo. I wanted to fix the problem and move on to more pressing priorities.

They 'lunched' themselves right out of my business and I've since switched to another carrier.

Don't waste my time. Not when there are hungry competitors out there just waiting for a chance to prove themselves worthy of my business.

(Next time: Developing a relationship with a new forwarder. How to discern who is ready and willing to handle your freight.)

TANGLED TARIFFS

In 2007 the harmonization tariff system as we know it will forever change. Whether those changes are for the better or for the worse it's hard to say since the usual bureaucratic legalese surrounds the news.

Some sources say the changes will affect primarily technology and 'sensitive' product classifications (i.e. that nuclear warhead Iran ordered). Other sources say the whole kit and kaboodle is going to change.

As far as I can tell, the changes are far reaching and will affect the whole enchilada. I've also read rumors that the tariff revisions will not be available until just before they go into effect, which means we'll all be scrambling to catch up. Oh goody. Running after the eight ball is sooo much fun.

You'll need to contact your forwarder and broker and discuss how the harmonization changes will affect your imports and exports. When? Now would be a good time and follow up regularly so you're sure you're on top of things as they develop.

And you'd better start analyzing your systems and processes to figure out the best way to quickly implement the upcoming changes.  I know I am. But then again, I have over 40,000 skus that need harmonization codes.

WHERE'S COUNT VON COUNT WHEN YOU NEED HIM?

One of the challenges in managing international shipments and their paperwork is getting all the piece counts and weights right.

You'd think it would be easy. It's not like shipments have 5 billion pallets or some other too-big-to-manage number. No. Shipments are limited by ocean/air container capacity. For ocean freight, you'll rarely get more than 20 pallets in a 20' container or 40 in a 40' container. 

How hard can it be to count to 20 or 40?

Apparently, very hard.

For the last month, all my piece counts have been off. This is a problem because international freight requires paperwork, accurate paperwork, to ship. If the piece counts or weights don't match the steamshipline's or airline's documents it's a No Go on the import side, which makes customers very unhappy and prone to screaming.

In doing root cause analysis, I've come up with the following factors driving these discrepancies:

1.'But wait, there's more' syndrome. Customer can't seem to place just one order, so multiple purchase orders, which all must be consolidated, dribble in. Freight ships and arrives at the forwarder's at different times. Piece counts must be added up across many truck bols. One order has become three, then four, then five. It's the order that will not end resulting in the ever changing piece count.

2.Consolidating outside vendor buys with a third party logistics coordinator. Five vendors with various levels of (poor) customer service, shipping at different times from different places? Oy. Nightmare in the making.

3.Illegible paperwork. Numbers cut off as if the fax machine is also a cropping tool. Bills of lading printed five pages after the toner ran out.  This happens more often than you would think.

4.Goods ship, but no one tells me or supplies paperwork. Sorry, my expertise is in international, not telepathy. No paperwork means I can't audit the piece counts my forwarder supplies. No data audit means mistakes happen.

5.Trucker decides to rearrange freight, making 20 pallets 18, and doesn't tell anyone. Or, worse, trucker removes damaged product, discards it, and doesn't say anything. (Are they hoping no one will notice???) Fifty different product skus and three boxes are missing. Great.

So, how do you know which products to take off your paperwork? Open the other 1,050 boxes and take a physical inventory. Fun stuff.

6.And that good 'ol standby: Human Error sometimes presenting as miscommunication or calculator failure.

DO TRUCKS FLOAT?

An R&D Labrat called me today with a unique problem.

Seems he gave a package to the mail room which, in turn, gave it to a trucking company. All well and good except the destination was Venezuela.

Trucks don't go to Venezuela. Not from the US.

I'm surprised the trucker even accepted the freight. In fact, they got all the way to California (from the East Coast) before they realized their eighteen wheeler did not magically turn into a boat.

The Labrat for his part was thoroughly flummoxed to learn the package was undeliverable.

I could really rib him at this point. He's got advanced degrees, can do high math (whereas I am lucky if I can balance my checkbook), and has a few patents to his name. Surely someone so smart wouldn't make such a dumb mistake.

But it's not the Labrat who's dumb,it's that the domestic paradigm has people so brainwashed, they can't think outside the box let alone outside the country.

What else are organizations missing in their efforts to go global?

A lot.

PITBULLS SHOULD BE OUR MASCOTS

People often believe international business is glamorous. They picture us jet-setting all over the world blissfully ignorant of the rampant diarrhea from bad water and chronic head colds from recycled airplane air.

We make deals during the day, visit the Eiffel Tower at night. Learn different languages. Tra la. Eat exotic food. (Fried goose beak anyone? No? How about some chicken feet? No? Well, pick one because you’ve got to eat something or you’re going to offend your customer.)

With stars in their eyes, complete strangers will often tell me how much they want to work in international business.

My response to this is, “Do you like pain?”

Taken aback they’ll say, “No. What does that have to do with the corporate jet taking me to Rio?”

At this point, I launch into my definition of international business…

International business is like a salmon trying to not just swim upstream, but escape a whirlpool.

It’s being the underdog no one roots for.

No one knows what you need and they don’t care because, internally and externally, it’s not part of their job description or their performance goals. This means vendors take your orders and process them same as their domestic orders, never mind you need heat-treated pallets or country of origin information. It means co-workers put your needs at the bottom of their to-do lists…if they bother to do anything at all.

International business is too often an add-on. It’s an ill-conceived afterthought, and, while some companies manage it better than others, the fact it’s an oopsie-baby shows.

International business is not for the weak. You are constantly trying to buck the inertia of a domestic business paradigm. Plus you get to compensate for process gaps in production, logistics, accounting, and marketing.

Marketing didn’t make bilingual catalogs? Well, lucky you, you get to translate them. Accounting can’t figure out how to balance the international accounts? Guess what you’ll be doing while they’re at lunch? It can be a lot like running your own business, something that takes a lot of energy and drive to do well.

Global Business forces established systems and paradigms to do something new and this is the core problem most International Business people face within their own organizations. It’s like working at McDonald’s and, on your lunch break, you ask the line cook to make a five star meal. This is exactly what you have to do in International Business day in and day out, and with the tenacity of a pit bull too. You ask people to do things they’ve never done before, try to elicit performance when there is no incentive, and you don’t take no for an answer, even if you have to do everything yourself. (Anyone up for carrying fifty pound boxes of promotional materials for Asia down three flights of stairs for the courier pick-up? No? Anybody?)

If that sounds like fun to you, maybe International Business is the field for you. But if you're looking for glamor, take a cruise.

HELLO WORLD!

Well, here I am. Finally in the blogosphere and ready to snark.

But first... sundry technical details must be addressed.