Why You Should Use A Local Freight Forwarder In China
When importing from China, the shipping process either intimidates the importer, or places them in the back seat. Shipping plays a huge role in the supply chain and because of this, every importer needs to plan ahead and understand how the process works in order to maximize their return.
A reliable freight forwarder can define the success of an importers business, and finding a logistics company you can rely on is a daunting task. Most businesses believe opting to use a forwarder in their home country will prevent issues and make communication clear and streamlined. There are big names in shipping, and these large companies create a sense of comfort, knowing they have existing resources in place to manage any type of shipment and issue that may occur. While these might sound like reasonable conclusions for opting to use a forwarder that is local to you, the most direct analogy you can ask yourself is, would you hire a New York City taxi driver to help you navigate around the busy streets of Shanghai?
This article is going to help you understand the differences between freight forwarders local to China, and freight forwarders local to you, and why you will almost always be better off opting for a forwarder who resides in the goods origin country.
When I first moved to China, over six years ago, to start a sourcing company, the natural decisions was to partner with American forwarders to help ship my clients products to America. This seemed like the natural decision, after all, it made a lot of sense to work with companies where the goods would be imported into. I probably shipped about 40 containers into America before I began telling myself, there has to be a better way.
The problem I was constantly facing was the disconnection between my American based forwarders, and the factories in China. While these forwarders had what they called agents in China, things constantly moved slowly, the communication was always worse, and we rarely saw any sense of urgency, and the price was consistently high. Every time I would travel back to the US, I would meet with these forwarders in an effort to understand how we could operate more efficiently. I tried small companies, the largest companies, and some in-between, it was constantly the same results; in China, everything felt disconnected, even though I was essentially next door to these agents. But in America, everything flowed flawlessly.
After about a year and a half into running my own supply chain business, I hired someone to manage our sourcing. She quickly saw the issues we were facing and setup multiple meetings for us to have with local freight forwarders. After a handful of meetings, we found some we liked, tested their service and have not looked back since.
Why use a freight forwarder in China?
It is worth pointing out, not all freight forwarders are created equal. Just because someone contacts you claiming to be a professional freight forwarder, does not mean they are qualified or motivated to your interests ahead of their own. Choosing a Chinese forwarder can be a daunting task and it may require multiple quotes, conversations, and small test shipments before you decide to rely on a new company for a majority of your shipments. Once you find a forwarder you connect well with, the benefits will often result in them being your most valued resource in Asia.
When your forwarder knows the local terrain, the flexibility can be endless.
In order to export goods out of a country, the majority of the paperwork is done in the origin county. This means, any amendments, or following up with the supplier can be done real-time by your actual forwarder and not an agent.
Operating costs are often lower in Asia, which allows forwarders to stay small and streamlined. They can choose the best routing, carrier, and price, whereas multinational companies are often stuck using their own overseas office or partners, regardless of whether or not it is the best option.
When you chose the right local forwarder, they will do everything in their power to resolve an issue, compared to multinational companies who focus on quantity and not quality, and rarely go above and beyond for smaller or newer clientele.
In China, real estate and labor costs are still cheaper than North America and Europe. This allows forwarders in China to offer tailored services such as repacking, relabeling, and consolidation for a fraction of what it would cost at the destination.
Your business is valued and your service can be personalized to fit your requirements.
You will usually work with just one or two individuals with a local forwarder. This offers a more intimate one-on-one relationship and not just a number, or an account that isn’t not growing at the speed the sales person wishes.
Many freight forwarders in China are accustomed to working with factories, and shipping for their clients. Because of this, they genuinely value western businesses using them, instead of a foreign forwarder. It is often easier for them to empathize with the client, which makes it a lot easier to find resolutions when an issue arises.
The longer you work with a forwarder, the more they learn how you like to work. Because of this, repeat clients can have a more personalized service as the relationship is being built. It is not uncommon to have extended payment terms and above and beyond service given after a handful of shipments.
The cost of shipping is almost always going to be lower when using a forwarder based in China.
Lower fees such as labor cost and handling fees are some of the main reasons you will find rates inevitably lower with Chinese forwarders. While manufacturing sectors are finding it more and more expensive to produce in China, the logistics industry does not have the same tiny margins as factories. Because of this, a forwarder in China has more flexibility and options when quoting freight and will almost always be able to beat any quotation that was quoted outside of China.
Being on the ground, local forwarders work with the best pricing based on the client’s specific logistics needs. Having a detailed understanding of the local network allows forwarders to truly optimize your supply chain, thus saving time and money.
Most international local forwarders with operations in China also use a local forwarding company because of their lower cost and knowledge. Don’t just take our word for it, look into any logistics company who ships out of China, but is not based in China. They too are using local agents, you just don’t know it!
Looking for a quotation to ship your products from China? Click the link below.
What are the downsides of Chinese forwarders?
Finding a good forwarder is not always easy.
It can be difficult to differentiate a good forwarder in China from a horrible forwarder. And similar to manufacturing, the only genuine way is to test them out.
If you know anything about manufacturing in China, you know how hard it is to believe a supplier when they tell you they offer a quality service. The same can be said for Chinese forwarders too. If you don’t believe me, navigate to your email’s spam folder and read the countless emails from random Chinese forwarding companies claiming to provide you the best service in China.
The bigger a forwarder gets, the greater their overhead. Thus, your best option is to search for a well managed, small forwarder who knows how to keep their costs low.
Money is often times a touchy subject.
Chinese companies who do banking in China make it incredibly difficult for foreign companies to work with them. It is not cheap to send money to China, and when you’re trying to save pennies on shipping, the high costs of Forex and bank transfers can negate massive savings at time. At times, forwarders will have Hong Kong or Singapore bank accounts to accept USD and EURO, but you're still required to pay high international bank transfer fees.
Chinese forwarders won’t offer great payment terms until they truly trust you, and depending on your shipments, this could take longer than using a forwarder local to you.
A lot of forwarders will provide quotations which are not considered ‘All in’, meaning you’ll be required to pay more once the goods arrive at your port. This is a common tactic for less than honest shipping companies to convince you to work with them. If you are still new to shipping, and are unfamiliar with all the charges found in a quotation, this could result in an expensive shipment.
Communication has the potential to be a lot worse.
If you don’t do a good enough job vetting your Chinese forwarder, you may realize chose one with horrible communications skills, only to find out when it is too late.
Beware of time zones. This can be a catch twenty-two if you don’t chose the right forwarder, because it means, if there are issues that arise when the goods are at the destination location, it way take half a day or more to get ahold of your forwarder, and then another day to resolve the problem. If your goods are stuck in a customs warehouse, for example, this could be incredibly expensive.
How did Guided Imports do it?
The first two forwarders I began using ended up working out incredibly well for us. I wanted to pass these benefits along to our clients, but the major thing holding these forwarders back were their lack of English and inability to accept USD. And let's face it, none of our clients wanted to rely Google translate for every correspondence regarding their shipments. Instead, we dedicated our time towards aligning ourselves with the best talent in China, and focusing on filling in the gaps where a lot of these forwarders lacked. Over the last four years, we’ve optimized our internal logistics operations and built an incredible network inside of China, where we are based, all while removing the negatives commonly found with Chines companies.
Today, we proudly consider ourselves as a local freight forwarder in China, with a United States corporation. Meaning, we sign our contracts according the U.S. law and invoice our clients from our U.S. entity. By keeping our operations in Asia, we keep our rates as low, if not lower than our local Chinese competition, but maintain our organizational presence in America. This structure lets us offer what we truly believe to be the best of both worlds.
If you want to try us out as your freight forwarder in China, we’ll gladly provide you with a quotation for you to compare us to your current shipping company.
If you don’t have at least one local Chinese forwarder in your contact list, I strongly suggest interviewing some to figure out if they can fit your needs. Even if you’re relatively happy with your current forwarder, having the contact information of someone local in China is an excellent tool when the inevitable issue arises and you need help getting yourself out of a jam.
How does Guided Imports compare to the better known competition?
The big name among Entrepreneurs and start-ups is Flexport, the billion dollar shipping company. While their ideas are great, they are a Silicon Valley tech company working as hard as possible to pay back their billion dollar funding by providing customers with cool looking tech in hopes they forget about their high price tag. We have to admit, their software is cool, but doubtfully worth the 20-40% markup they're known to charge above standard pricing.
For the companies that have been around for what seems to be 100 years, these are the shipping companies that are unable to adapt to technology and refuse to improve their customer experience. Kuehne + Nagel, Vanguard Logistics, and Eculine are known in the industry as the DMV of shipping companies, since their customers are constantly suffering from their long weight times, antiquated processing, and poor service. These names are some of the larger companies who have office of some sort all over the world that we warned you about earlier in this article.
As for the Chinese forwarders, some are also striving to understand how they can better market services to western importers. This is why you will routinely see broken English post pop up on Linkedin, Facebook, and Reddit offering their services. The problem with a lot of these companies is their poor communication, and unverifiable businesses that can be just as worse, if not more than the horror story factories you do everything in your power to avoid when sourcing on Alibaba.
With the options listed above, it should be apparent why we've focused so much effort on providing an alternative solution. We keep our teams small, invest in logistics management software that people enjoy using, and strive to offer a service that works, leaving our clients excited for their next shipment.