Logistics in China: Part 1
May 13, 2012
Logistics is an essential component of successful operations anywhere in the world, but especially in China where services rendered may not be what they seem.
Global supply chains are easily disrupted when you do not consider critical logistics services. Some companies blindly trust their supplier to arrange transportation and the export of products from China.
There are thousands of small logistics companies in China that advertise as freight forwarders and export trade brokers. Almost anyone will say they can do this job because they have connections to trade services. But so many things can go wrong and result in supply chain disasters. If a Chinese shipper cannot get goods to US or European markets in time for the season or the sale, or to meet peak demand, the company’s logistics network has failed.
Small freight forwarders can provide personalized service when you need special care, but they may also add time and frustration to your supply chain. Because they are independent businesses, small Chinese forwarders rely on a network of agency relationships and one-off favors to move freight. Essentially, these small forwarders and brokers are just cargo coordinators. They typically do not own any of their own equipment, make no investments in capital equipment or systems, and rely on subcontractors to provide trucking, air, and ocean freight. Their networks are only as strong as the weakest link. It is common to see small forwarders like this in tier-two or tier-three cities, moving cargo in tricycle carts from manufacturing sites to airports. Some of these companies also subcontract the preparation of export documentation, including US Customs’ 10+2 reporting which can cause delays in China if documents are not properly prepared.
You should select a freight forwarder or broker with a global network of company-owned offices, standard procedures, and information technology (IT) systems capabilities to comply with the complicated export and import regulations.
Global logistics providers that have established offices across China, such as Expeditors, Ceva, or, Kuehne & Nagel, among others, offer advantages, including:
• Standardization and consistency of procedures worldwide
• Up-to-date information about export/import regulations
• Communications standards and protocols
• Global IT systems to track the many documents required for global trade shipment progression and compliance with trade regulations
• Negotiated rates and schedules with air and ocean carriers
• Standard documents and assistance with completing them
• Landed cost and total cost estimations
• Familiarity with International Commerce Terms of Sale (Incoterms)
Keep in mind that just because these forwarders are larger does not mean they are more expensive. Very often, the size of the forwarder allows them to negotiate for better volume rates from ocean and air carriers.
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