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When shipping overseas, export business owners must forge many relationships to be successful. But freight forwarders, perhaps, are among the most important.
Freight forwarders are involved with an exporter's products from dock to door. They move the physical goods in cargo containers by ship, air or land. They liaise with customs officials in foreign countries, calculate international shipping costs and prepare required export documents. In fact, a forwarder may actually be critical to landing a sale because the final price will be dependent on shipping costs.
To minimize shipping costs, small business owners should consider using an online foreign exchange service to secure the latest exchange rates and initiate bank to bank money transfers for their international payments.
— James Foley, director of the Turner Center for Entrepreneurship at Bradley University and author of The Global Entrepreneur
"I consider the relationship that a company has with their freight forwarder as probably one of the single most important critical success factors to international trade," says James Foley, director of the Turner Center for Entrepreneurship at Bradley University and author of The Global Entrepreneur. "Think of them as like a travel agent for international freight."
There are three categories of freight forwarders. One of these options is an integrated carrier, for example, DHL, which is a one-stop-shop entity that is best suited for small export businesses wanting to send only a few boxes when shipping overseas.
However, most exporters will be interested in sending bigger shipments, enough to fill a 20-foot or 40-foot shipping container. In that case, an export business can choose from one of the big international freight forwarders with offices around the world, like Kuehne + Nagel or Expeditors.
A third option is to go with one of the numerous smaller family-owned forwarders, Foley says.
Choosing between a global company or a family-owned company really boils down to personal preference, Foley says. "Sometimes a company picks their forwarder based on just a good personal relationship that clicks," he says.
An export business might choose one forwarder over another based on any good or region that they specialize in. But, whatever forwarder a business chooses, Foley says, it's important to maintain relationships with at least two different forwarders.
It's also important, of course, to make a decision partly based on cost. "The more you can make that freight competitive, the more competitive your product will be," Foley says.
A referral is usually best when choosing a freight forwarder. But a business can always contact The National Customs Brokers and Forwarders Association of America, a trade organization based in Washington D.C., or the U.S. Department of Commerce, which has a network of export assistance centers around the world, and even a Web page dedicated to explaining the role of a freight forwarder.
Foley recommends that small businesses contact their local Small Business Development Centers or local U.S. Export Assistance Center, many of which have staffers who are knowledgeable about exports and freight forwarding.
By making smart choices during the vetting process, it's possible to lay the foundation for a prosperous relationship with a business's freight forwarder. "A company's relationship with their freight forward is critical because shipping goods internationally can seem daunting," Foley says. "But in working with a good freight forwarder, those risks are much less, and the process much easier."
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