International Freight Management

Detailed below is a (non-exhaustive) checklist of what we would expect to see from a best of breed organisation in respect of international freight management.

  • Negotiated group-wide freight rates for all trade lanes served: Not only does global leveraged purchasing reduce shipping/logistics costs but it also dramatically reduces the supplier base whilst improving supply chain co-ordination.
  • Metrics and internal cycle analysis: Metrics are essential because they allow organisations to monitor internal and external practices.  The ability to gauge any system allows companies to utilise best practices and monitor red flags.  Metrics are also useful in providing information to gauge actual vendor service levels against promised service levels.  The ability to track shipments throughout the supply chain allows a company to verify that they are receiving the best overall service possible, at the best price. Results of these measurements, metrics, can be on a cycle time or cost basis.  For metrics to be useful to an organisation it must contain four characteristics:

    • Validity – concepts that are intended to be measured are actually being measured;
    • Reliability – the metric is constant.  If circumstances do not change results should stay the same;
    • Practicality – results are relevant to processes of the organisation; and
    • Salience – measurements must have a meaning to those who will be implementing change and have importance to overall systems.
  • Minimised and regularly reviewed supplier base: In negotiating freight rates on a global basis the supplier base can be vastly reduced to a core of specialist service providers, consequently, this enables a considerably greater degree of control and management of these vendors.
  • Continuous review and benchmarking: To maintain a firm grip on overall shipping/logistics efficiencies and expenditure it is essential that logistics processes and costs are reviewed regularly not only to ensure best practice is being achieved but also to keep a tight reign on freight expenditure which can often increase dramatically before anyone really notices.
  • Global infrastructure: Developing and maintaining a global shipping/logistics infrastructure to support the entire business is very important if you are to be successful in managing the global sourcing, transportation and distribution of goods, anywhere in the world.  There has to be an organised methodology on how the global logistics function is managed, clearly defining each individual’s remit and responsibilities.
  • Information, Communication, Technology: Today’s best of breed organisations cannot survive efficiently without utilising the latest technology available.  The accessibility of the internet has changed the way the freight forwarding and logistics industries have conducted their business.  Today’s ICT solutions can dramatically accelerate the velocity of a supply chain.  Whether you’re supplying, buying or facilitating the movement of goods worldwide, you can now have complete electronic connectivity to your existing systems, internal and external customers and transportation partners – international and domestic, across all modes.
  • Commercial: In order to minimise the risk of commercial exposure it is essential that all members of the global logistics team are trained logisticians with detailed working knowledge of international trade, in particular, Incoterms 2016, International Letters of Credit, Marine Insurance, Hazardous Goods, and Export & Import Compliance.  It is also essential that the most appropriate trade terms are used when negotiating contracts to eliminate unnecessary costs.