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Things to Avoid When Choosing a Freight Forwarder

Things to Avoid When Choosing a Freight Forwarder 1000 665 Transmodal

Choosing a freight forwarder who is reliable, offers competitive rates, and is a good fit for your business is no easy task. With so many freight forwarders in the industry, and so many factors that need to be considered, it can become an undertaking. While what to look for in a freight forwarding company is often talked about, there are a few things that should be avoided as well.

Unbelievably Low Rates

Most of us are price sensitive and attracted by a low price because we want to work within a budget. But some freight forwarders use price as the bait for their false and misleading advertising. They offer cheap rates (usually $200 to $300 per 40 ft. container below everyone else) and once they get their foot in your door, they pressure you into buying “add-ons” or simply add “third-party fees” to your invoice.

For example, when investigating such ultra-low rates you’ll usually find that the wharfage (i.e. the fees ports imposed on ships against the amount and the weight of cargo handled there) isn’t included, the bunker (fuel surcharge) isn’t included, the Terminal Handling Charge isn’t included and so on. It’s almost as if you bought a car and found that the dealer was charging you extra for the tires and the steering wheel.

Freight forwarding is not as cheap as some unethical freight forwarders would like you to believe. When you ship freight from China (or any other country), there are a number of third-party fees associated with it. So, you should look for a freight forwarder that is upfront about this and quotes actual total cost.

No Liability Means No Freight for You

While every freight forwarder, steamship line, or airline has some element of liability in the case of theft, loss or damage, there is no law that obligates them to have their liability covered by insurance.

Well, here’s the dirty little secret: If a freight forwarder doesn’t maintain cargo liability insurance, he might be tempted to intentionally lose your cargo.

And what happens if you try to claim compensation for your lost cargo from the freight forwarder in this case? Simple. If that freight forwarder cannot pay the claim because his company simply goes out of business and re-opens later (after selling your “lost” cargo on the black market). When considering doing business with a freight forwarder request a policy declaration form that shows the amount of insurance the freight forwarder holds.

Also, remember that a freight forwarder cannot just buy such an insurance policy. Before an insurance company underwrites such a cargo liability policy, they perform their own due diligence using their vast resources and market intelligence. So, chances are that a freight forwarder that can provide a valid insurance certificate is a legitimate provider, whereas a fly-by-night provider will usually find it very difficult to even get insurance coverage.

Save at First, Then Pay Double

This is common in the domestic trucking brokerage world. In this case, a freight forwarder begins by hiring carriers and pays them well, at first. Then that freight forwarder starts opening up new carriers, using the first carriers as references. Then the freight forwarder starts offering incredible savings (as high as 25-30%). Unsuspecting clients jump on the deal and order a lot of freight to be moved with this provider.

However, the freight forwarder moves the cargo, gets paid, but never pays the steamship line or trucker and disappears with your money! But since you’re the beneficial owner of the cargo, you’re fully responsible for those charges, despite the fact that he paid it to the broker. The fact remains that he didn’t pay for the carrier and before you know it, your getting contacted by an aggressive collection agent demanding you pay the outstanding freight bill (which of course you already paid to the con-man a/k/a freight forwarder).

To avoid these situations, you should consider only freight forwarders that have been in business for a long time and have a proven track record of ethical business.