Apples to Oranges:
Best practices for comparing rates
Comparing rates across multiple forwarders on an international shipping lane is no easy task.
If you have ever struggled in doing so, know that you are not alone. To some extent, the market is designed to make it difficult — given the introduction of “subject to” pricing models. We’ll review some best practices you can employ to help simplify the task of comparing rates across multiple forwarders to ensure you make an educated and cost-efficient choice on who to use.
First, some vocabulary.
What is “subject to” pricing? This is a rather recent mainstream trend across logistics. While overall it has resulted in cost benefits for customers, it has unfortunately made cross rate comparison tougher.
This pricing approach, used by nearly all forwarders, states that rather than assuming different services and events will occur on a shipment, only the bare necessities will instead be included in the quote.
For example, on Full Container (FCL) shipments, every shipment delivered requires the use of a chassis. Chassis are often billed per day of use. No container can be delivered without a chassis, and so all shipments will include this charge.
In the new “subject to” pricing model, however, forwarders will quote lanes based only on the charges they know. This means customers get a quote for the basics, pickup, freight, customs, and delivery as applicable. The forwarder isn’t lying or intentionally hiding anything — they just can’t quote what that can’t foresee. Will it be 1 day of chassis or 10? Will it be delivered within the free time or will it require extra wait time? No one knows until after the shipment.
To ensure an apples-to-apples comparison, a customer can look for the following on quotes:
- Wait Time
- Chassis Charges (FCL only)
- Additional Customs Services
- Chassis Splits (FCL)
- Drop Fees (FCL)
- Appointment Delivery
- Overweight Fees
- Overweight Deliveries
- Lift Gates
- Disbursement Facilitation
- Check Cuts
- Export Customs Clearance
- Import Customs Clearance
Best Practices: A Quick Review
Understand your current needs in detail.
Obviously, you’re moving freight from point A to Point B. But what about the details? Do you need appointment deliveries? Can you unload a shipment within the free time? Are you paying your own duties? Do you require customs assistance? Make sure your pricing includes what you really need, not just the minimum.
Check on your current solution and provider.
In most situations, shipments are already occurring with a current provider. Don’t look at their quotes to you — instead, go to the invoices. The invoice will always show the full picture and will highlight any hidden fees. To quickly identify areas for additional understanding, compare the invoice of the current provider with the quote from the current provider.
Don’t accept all-in rates.
Unless you’re working in a cargo project environment or serving unique business purposes, do not accept all-in rates from forwarders. This makes it difficult to compare the quote to other forwarders and to the invoice at the end of a shipment.
Exercise your right to ask questions to your providers — both the current forwarder and new candidates.
By following steps 1-3, you should be able to get an understanding of the commonly unquoted charges occurring on your freight lane. If a quote does not include these charges, you can ask a forwarder to identify what the charges would be if/when charged.
Look for inconsistencies.
International Logistics is largely commoditized. This means that all reputable and well-licensed providers are able to provide solutions using the same set of airlines, trucks, and ocean vessels.
As a customer, this means that if a provider comes in with a drastically lower priced solution, something is probably wrong or missing. Typically, the service quoted was wrong (a quote of Port-to-Door instead of Door-to-Door), or the transit route was notably different (deferred vs standard), or charges are simply missing.
Just because you ask for it to be quoted, it doesn’t mean that it actually was.
Often, customers will ask companies to include or exclude certain details. For example, we work with a very price-sensitive customer importing from China who refuses to use ports in Canada. As such, when Clutch Global provided pricing, we were sure to include only US ports in our proposal.
Of the three forwarders included in the bid, we were the only one to do so. Our two competitors provided a slightly lower rate. When investigating the reason for their lower rate, the customer quickly identified that this was because those providers had only quoted Canadian ports (despite their clear request). We have happily been working with this customer for years now because of our honesty, great service, and fair rates.