Mike Bronowich on the Art of Freight Forwarding

April 30, 2008
By Michelle Kelley

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I think freight forwarding has morphed. There was a time when forwarders were very much discreet from the operations of their clients. Discreet in terms of not being on a continuum, just moving it from A to B. And I think that now, in order to be successful, the freight forwarder has to blend with and offer services to clients that they might not even know that they need.

There was a time when people had a shipment that happened to be going from Syracuse to California, and they just wanted someone to pick it up and get it there. The only criteria was how much it cost.

The reality is that now, with the way that transportation infrastructure is, you have to be concerned with transit times, conditions of carriage, rates–not only the absolute rate, but the rate of what it costs per unit, to get it from that origin to that destination.

And that’s where the forwarder has the unique position. In days gone by, freight forwarding or freight movement was considered to be a necessary evil. And I think that little by little, in the last 30 years, that’s changed. People are now looking to partner with their freight movers.

A large component of this partnership depends on the shipper’s relationship with the supply chain in general.

The shipper must make their needs visible to the forwarder. You can’t accomplish that without full disclosure. Provide the forwarder with every piece of information that you can. Start thinking of your forwarder as a partner. Give them a detailed description of the physical properties and exact dimensions of the goods. What is the value of the goods? What is the nature of the transport movement? Does the shipment have any special temperature or pressure requirements? Can the shipment withstand a pressurized environment (if moving by air), or a hot/cold environment? This information is critical to the forwarder, more so than it is to the shipper/consignee because the forwarder plays a much more active role in the transportation process. Once you provide these details, the awake and alive freight forwarder can most effectively complete the task. The less information you provide, the more room there is for error.

The right freight forwarder takes responsibility and ownership of moving people’s goods.

In our mission statement, we say, “We handle your goods as if they were our own.” There are some freight forwarders that are so distant from the shippers, the consignees, the owners of the goods, that they operate almost completely outside of the supply chain. They just add to it. They make one move; they move part of the way. They don’t take any responsibility for actually giving place utility to the goods. A good freight forwarder takes to heart all of the obstacles that cargo has to overcome in order to get to its assigned place, at the proper time, and in the right shape.

The freight forwarder must consider of all the difficult hurdles that shippers and receivers have to overcome. There are issues about financing, issues about cost, issues about compliance, issues about security. All of those are solved better by bringing multiple parties into the scenario as long as their actions are coordinated.

And the coordination that is needed now is really great because there are a lot of operators, a lot of cargo is moving, more international and domestic cargo is moving than ever before. And the available population of people to do it is shrinking because there have been a lot of mergers and acquisitions. In some of those cases, some of the talent falls by the wayside.

Many corporations have people specifically assigned to handle a client’s movement of goods. These people are entrenched within the corporation. These people are inside. This is significant because people whose core competency is building products, apparel, machinery, etcetera, don’t really see the relevance of paying for a large logistics group within the company. They’d rather buy it on a variable cost basis. When business is good and there is a lot of activity, they are willing to pay someone to do those activities. When business takes a little bit of dip, they need not pay significant salaries to a group that isn’t moving significant product. The only alternative would be to lay people off.

Businesses are relying more on their freight movers than ever before, and justifiably so.

People want to protect their intellectual property rights.

Sometimes they take security strategy a step further than they should in order to be fully confident that nobody knows of their new idea or design. Certainly, you can give almost full disclosure without providing design information. People in the freight business, because they are licensed, have to keep information proprietary as it is given to them. We act as agent for our clients. We have power of attorney. We have a shipper’s letter of instruction. We have something that binds us to them for that transaction or over the long-term. We hold that commitment to be very serious and very important. So there is no way we would divulge this information to anyone outside the need-to-know group.

We make recommendations for apparel companies to take a look at their packaging–to put more garments in the same box.

It does two things. You move more garments for the same price, because in ocean freight everything moves by volume more than weight (until you get into real dense cargo, sheet steel, rolled steel, and the like).

Also, those filled boxes end up being more potent. They end up being more stackable. With the lack of empty space, these boxes become stronger and are able to go through the handling process with less difficulty, with less breakage, and split corners, if they are packed properly.

If we get instructions from a client shipping large dimension cargo from a port that is not laden with lots of specialized equipment, that client is probably going to have an additional difficulty. So we ask, “Can it be rolled on its side? Does the design allow for it to be propped up or put on an angle in order to take advantage of the space across the bottom of the trailer or container?” In most cases, the client will say, “I don’t know. I’ll have to ask the engineers or the design people.”

Ultimately you get to the point where you have to take advantage of the available space at a certain cost. And if the load plan doesn’t work, people recognize that there is a difference in cost. So when the cost comes to them in the form of an invoice, they’re not shocked and dismayed.

Companies who have ready and steady available cargos like to lock in cost at least for a season of shipping.

They take into consideration the cost of ocean and air, the probability of prices going up due to fuel and other issues. They want to lock in a cost so that they can put in their business model what it will cost them per unit. I think it is a driving force for consumer goods for sure, and not for the ad hoc shipper who ships once in a while, to a certain area.

For people whose average shipment falls in the center of the bell curve, and who know exactly what parameters are required, they look to the freight forwarder to give them blanket coverage for their shipment. It makes sense for some and doesn’t make sense for others. The more stable companies with more stable shipping patterns would probably do well to consider that.

Companies should latch onto a forwarder who is sensitive to their needs.

They should act in full disclosure and in full commitment as a partner. You’ll get visibility; you’ll get counsel; and you’ll get compliance and security, in addition to just moving the cargo from origin to destination.

In dealing with Mohawk, smaller shippers can afford themselves the benefits of a much larger shipping footprint.

Because we represent many small and medium-sized shippers and receivers of goods, that arrangement allows us not only to get better pricing but to get better service and issues taken care of.

We can make sure that we use the best inland carriers because we are acting in concert with all of our shippers and receivers. The volume of the combined or consolidated movement of cargo usually represents a safer, less expensive per unit cost, and a more directly controllable transaction.

Mike Bronowich is Senior Vice President of Mohawk Global Logistics. He has been with the company for over 20 years.

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