Best Practices of Logistics Service Provider
It is a logistics service provider as the company operates as a freight forwarder in a dynamic and profitable new sector. John (p154) indicated that freight forwarders are just like high-street travel agents, except that they arrange transportation for freight, not people. Freight forwarders involved a big area of activity in arranging customs clearance for freight that moves internationally(this is sometimes referred to as brokerage and encompasses not just dealing with customs agencies, but also managing all documentation that should accompany freight). With the development of regonal trade agreements increasingly freight can move freely within regions, thus obviationg the need for customs clearance for the freight. Freight forwarders have thus broadened out their product portfolio to encompass many other activities.
A freight forwarder is an organization which provides a logistics service as an intermediary between the shipper and the carrier, usually on international shipments. Freight forwarders can respond quickly to changing shipping requirements and international shipping regulations. (5 about.com)
They cooperate with many other local companies or branches in different locations, so that the company can offer operating processes and procedures across all locations and countries. Sources: Kevin Michel, A case for expanding the scope of your warehouse operations and connecting to the rest of the world Cadre Technologies, 2003
Importance of Freight Forwarder
Customers expect to benefit through consumption of goods imported, thus creating a value chain. Goods have to reach the point of consumption within the shortest possible time. Use of unqualified and inexperienced clearing agents also contributes to delays in clearing of goods.
Lowest total cost
Information is the enabler for SCM
Superior customer service
Inventory reduction and postponement of orders
Reduced logistics and operational costs.
Reduced in-house staffing and vendor costs.
Increased time to concentrate on your core business, while we handle the supply chain issues. Increased output and productivity with a seamless logistics operational platform. Lowered overall administrative costs that increase the bottom line. Creation of a supply chain system that is both scalable and measurable to prepare for future growth. State-of-the art supply chain software that is scalable to grow with your business.
The company do not operate their own vehicles and vessels, company has to follow carriers schedule, and vessel space. do not operate warehouse they have to depending on customers shipments, if their customer reduce the volume of shipments, freight forwarders will have to follow instruction.
Customer loyalty will be lost due to inefficiency in distribution of goods. If there is mistakes done by inexperienced staff are costly in terms of demurrage charges, damage to customer goodwill and relations in upstream and downstream linkages in the supply chain. Having unqualified personnel is the most dangerous gamble and liability which should never be experimented with since customers reject delayed cargo and the clearing agent end up facing legal penalties thus increasing costs in the supply chain. Poor infrastructure has a negative impact on the efficiency and effectiveness in distribution of cargo. Poor management of roads, railways, airports, waterways and bonded warehouses negatively impacts on the efficiency of the supply chain hence the need for the government to invest heavily in infrastructural development.
To implement 3PL successfully, one may need to bear in mind some possible pitfalls: Loss of control over the logistics function (especially for critical parts) More distance from clients.
Loss of human touch.
Discontinuity of services of 3PL provider.
Differences of opinion or perception of the service level of the third party provider. Reference