Choosing the right Freight forwarding agency

Many small businesses (or those who have just started) find it extremely hard to go through the frustrating procedures of documentation, legalities and clearance, that unfortunately, is a must in all types of international trade. There are quite a number of fronts to handle, and more often than not you find yourself trapped in these time-consuming tasks, when you should be working on the more important ones like marketing, communicating with clients and finalizing new business deals. As a small business, you are left with two options, either hire more staff for these jobs or outsource everything to a freight forwarding agency.

Professional freight forwarders have a clear advantage over your newly hired staff, first they are far more experienced, second they have good working relations with many parties involved in transaction and third, they know many cheap alternatives for transportation. A good freight forward agent will be able to assist you from the word go if you have no real knowledge of international trade. Best way is to engage a freight forwarding agent even before you finalize the prices, as he/she can give you an exact idea on how much documentation, insurance or shipment can cost.

While choosing the freight forwarding (or clearing) agent, you must consider following guidelines.

Experience:
The prime reason for you going to the freight forwarding agent is his/her experience for carrying out those tasks. No matter how qualified your freight forwarding agent seems to be, don't close your eyes to the past experience he/she has in the field. An experienced freight forwarder can prove to be a lot more helpful because he/she will be having working relations with relevant parties. Being an "old hand" also reflects that the freight forwarding agency is a long-standing business.

Knowledge:
Choose the one with extensive knowledge of the market, policies, rules and procedures, and more importantly the best modes of shipment. The agent should be capable enough to go through complete process with ease and in a timely manner. An ideal freight forwarding agent will have the knowledge, skills and technology to provide, you and your customers with top-notch services.

Price:
Freight forwarding agent substitutes you for a good number of tasks, plus he/she will provide you with valuable counseling and guidance as well. So, the fees are supposed to be considerably high. Decide all the services you expect to receive and settle on prices in complete details, make sure there will be no additional charges in the future. If you are dealing with a freight forwarding agent from another country, bear in mind the communication problems (because of foreign language involved) that can arise in the future.

Role of distributors & agents in exporting business

As a manufacturer or exporter who is willing to step into some foreign market, you should better be starting in a safe and calculated manner. One relatively safe and secure method is to start with indirect exports and see the response. There are many ways to start indirect exports, but the most widely used method is to hire the services of commission agents or get into a contract with some distributor. Although, their roles may sound a bit similar, both of them differ at some points. Let’s look into the role of these two in detail.

Agents:

Also known as commission agents, they are responsible for selling your products in foreign market. They are experienced campaigners and quite familiar with the market you are going to target. They know the customers and their needs. However, the thing to remember is that they are solely responsible for selling your products. They do not buy from you directly; neither do they involve themselves in delivery or after sale services in most cases. Their source of earning is the fixed commission on every sale (or gross sales, they will make for you).

Commission agents must be able to meet following requirements before you hire their services.

Should be having loads of experience

Check to see if the agent also deals in some of your competitive products

Past record of sales and the stats for business they have provided to other exporters in the past

How much of the market that agent can cover on his/her own and to what extent

Do they sell to end users or businesses?


Distributors:

Unlike commission agents, distributors normally purchase the product from you (at low rates) and then sell it in the market, all the time maintaining some inventory with them. Given, they also provide after sale services, they are more suited if your product needs some installation work or requires after sale services.

Distributors should be financially stable

They must be good in inventory stocking and warehouse management

Should be having technical information about the product (train them if needed)

Should be ready to work at price margins you are willing to offer

Be careful when going into a contract and think over the clauses many times before signing

Distributor should be capable of running or managing the advertising campaign if needed





Now, whether you should go for agents or distributors? The answer to this question will depend on your product and preferences.