BUSINESS PRACTICE. Safe Delivery: Life Hacks or ‘Know Your Partner’

The companies participating at ACEX international logistics alliance shared customer service approaches.

This article contains some recommendations and tips on how to save time and money, prevent possible risks, do no harm to your reputation and deliver the goods safe and sound.

Collection of primary documentation will shorten the time for the application approval

Before placing an application, it is important to determine the weight, volume, type, cost, and nature of the goods that need to be sent or received until a certain date, as well as place of dispatch and receipt. During the initial communication with the transport logistics, such data will help reduce the time needed to obtain the necessary information about the cost and the possibility of order execution in accordance with the terms agreed with the counterparty of Incoterms.

Pavel Avramenko, Chief Operating Officer of ATS, ACEX member in Shanghai: ‘For starts, it is important to understand what type of transport is planned for transportation. There is a case in China: if a cargo owner plans to transport cargo by sea, then it is enough to place an order for goods on FOB terms Shanghai, Ningbo or Shenzhen. These cities have the major international ports, so it isn’t difficult to deliver the goods to any port of the world from there. If you plan to transport your cargo by air, then there are some nuances. For example, if you need to deliver goods to Moscow, sign the FCA Shanghai or Beijing. If you are taking goods to the Russian regions (Yekaterinburg, Novosibirsk), then it is advisable to find out the route in advance, most frequently it’s better to sign the FCA Beijing. It is also important to consider the physical parameters of the cargo. Transporting one ton of cargo by air, packed in identical small cardboard boxes, costs much cheaper than transporting the same ton in one package with non-standard dimensions.’

Yulia Pritykina, Commercial Director of Atlantic Cargo, member of ACEX in Moscow: ‘For the initial discussion of import delivery, the cargo owner should already have a Proforma invoice or the invoice itself and a packing list. In general, the documents, which indicate the weight, volume, cost, delivery conditions and the shipment address of the future batch. The transport company is likely to offer its contract for making the transaction. All other documents can be provided closer to the beginning of the movement of goods. You and the supplier have to clarify the conditions under which the goods will be transferred to the carrier in advance. You should learn how many days after payment he needs to prepare the goods for delivery, whether he is engaged in export processing in his country, and whether there are special conditions for loading and moving the goods. This information should be coordinated with the carrier.’

Outsourcing of feasibility study services will increase the efficiency of request processing

There is no base of proven reliable carriers in open access, and the search for experienced managers with their own achievements can take a lot of resources. In these cases, you can use the services of outsourcing.

Marat Zaynetdinov, Operating Officer of NAWINIA, ACEX member in Moscow: ‘If the client does not have an experienced logistics department or a procurement department, or the cargo owner is limited in time, then it is better to outsource the selection of transport service providers to a reputable freight forwarder. A high-quality logistics provider has experienced staff and time-tested procurement procedures, as well as an established base of carriers. The client can set certain criteria for the cost and quality of services, fix them in the feasibility study contract, and monitor the implementation of KPI.’

It’s much easier to get a deferment of payment if you reach an agreement in advance

In case of lack of turnover, companies can ask for a deferment of payment. An effective way to get it is to provide a pledge as a guarantee of payment.

Yulia Pritykina, Commercial Director of Atlantic Cargo, member of ACEX in Moscow: ‘Partnership work means asking for a deferment of payment before the start of transportation, or before the season begins. If this requirement suddenly appears in the course of order execution, sometimes even accompanied by manipulative statements, then you should think about the state of affairs of such a client. In general, you always want to have something as a collateral value as a kind of a guarantee.’

Miroslav Zolotarev, Chairman of the Board of the ACEX Alliance: ‘If these are our own services, for example, customs clearance, then we can postpone it at our discretion. If these are consultancy services, for example, on air or road delivery, it will depend on the terms of the agreement with the carrier and its financial conditions. In such situation, you either have to move the client towards the carrier’s conditions, or the carrier should move towards the client’s conditions. Since it is often impossible to fulfill both of them, pay the first one in advance, and receive payment from the other in a month. At the same time, there should be no risk not to receive payment; this risk should be completely eliminated. It’s better to check the client’s financial condition, history of his work in the market, availability of court cases, etc.’

An individual approach helps to achieve favorable conditions of insurance

Insurance companies constantly offer new types of services. Customers are provided with online reports, with a reduce of the rate when turnover grows and making insurance payments without further references. Savings on this issue, according to experts, can put cargo owners in a difficult financial situation. Individual contract parameter, on the contrary, will help to achieve more favorable conditions.

Denis Bobrakov, Commercial Director of ACEX in Novorossiysk: ‘It is better to spend money on insurance than to incur irrecoverable losses. Moreover, you can choose from a large range of such services with a broad carrier responsibility. Our company operates mainly in shipping, where there is always the risk of damage to the cargo. With a high degree of rough seas, containers may get wet, or something more serious might happen. Everybody has long understood that insurance is one of the main points of the contract. Previously, customers simply lost money, even if the court was drowning due to external factors, such as natural disasters. Now we immediately offer to issue the necessary insurance policies.’

Internet services and online applications will help in the work

The digitalization of logistics is constantly evolving, increasing the speed, quality and transparency of services. Alliance members also recently launched digital platforms on which transport companies can instantly receive and provide their customers with an accurate variable calculation of the international transportation services of groupage and containerized cargo.

Pavel Avramenko, Chief Operating Officer of ATS, ACEX member in Shanghai: ‘We use highly specialized TMS and ERP systems, configured specifically for the operation of transport companies. In the near future, we are launching a tracking system that will allow us to control the movement of not only a cargo lot, but each individual package. It will also enable to report to the client on the movement of each package in real time.’

All parties to the transaction should check the correctness of the drafting of documents in order to avoid mistakes

Now almost any company has legal departments that accompany transactions and explain the order and nuances of fulfilling the terms of a trade contract. However, experts still insist that the joint preliminary study of documents with the logistic partner will help avoid mistakes, save your wallet from expenses and nerves – from unnecessary stress.

Marat Zaynetdinov, Operating Officer, NAWINIA, ACEX member in Moscow: ‘Our customers turn to their customer support managers in such situations, the English term speaks for itself – support. To minimize errors in the workflow on the client’s side, we often check the accompanying documents before shipment and adjust them together with the client. Automation also helps when IT excludes the human factor. Of course, it is important to explain possible consequences of such errors to the client – downtime and delays, additional costs, the inability to receive the insurance payment, and many others.’

Miroslav Zolotarev, Chairman of the Board of the ACEX Alliance: ‘We need to specify, who is responsible for the documents and who verifies the data. If this is not done, the client will be in charge, because according to the transportation rules, the client is responsible for providing information. For example, during air transportation, the logistician prints an invoice, but the sender is responsible for information, so, logically, he must verify the data or instruct the logistician to do it. If the logistician is conscientious, then in case of problems he will be responsible for them, and the client will have no doubts where to go – his contractor, of course. At the same time, the contractor must explain the limits of responsibility to the client and his ability to be responsible for the actions of carriers in the chain.’

Checking counterparties eliminates the risk of communication with unscrupulous companies

Before co-working with one company or another, it would be a good idea to conduct an inspection. It will not take much time, but it will give an idea of who you deal with: who is the owner, who is the counterparty, what the media has to say – you can expand the ‘checklist’ if you wish. These questions should be posed both in relation to small and well-known international corporations.

Alexey Lipatov, Head of Multimodal Transportation Department, ACEX Moscow: ‘If the task is to work out one or two routes or set up work with general cargo, then you don’t need to turn to the logistics ‘monsters’. However, when choosing a partner, you should take into account the experience precisely for the services you need. This experience should be supported by recommendations from clients or partners, photos of implemented projects, etc. One shouldn’t believe a word on a website with common phrases. There are no companies that can do ‘everything in the best quality’ and ‘almost for free’.’

The size and popularity of а company does not always guarantee the quality of service

It may be difficult to choose an operator – the question is whether to entrust the transportation to a foreign company or a local one. The principle of popularity and global scope of the company does not always work. Experts have a number of recommendations for this case.

Alexey Luvsan, Deputy Director of Operations, ACEX in Finland: ‘There are risks and benefits associated with the transfer of freight to small firms. But the size of the company is not the key factor in issues of trust and risk. I would not give expensive goods to a small, unfamiliar company. I would also order complex and non-standard services from large companies with experienced employees. When there are some problems during transportation, as a rule, large corporations have a more standardized approach for solving them. However, small companies have a better way with service flexibility and communication.’

Maria Moskvicheva, General Director of ACEX in Rostov-on-Don: ‘In cases, when the transportation project involves large dimensions, is expensive or multimodal; also, when you need permits, escorts, overloads, any multistage and irregularities, you should choose a large international company.’

What is the secret of these tips, you ask? The ‘know your customer’ principle can be taken from the opposite perspective as ‘know your logistician’ and together they become ‘know your partner’. Only this approach will help to avoid difficulties, unforeseen problems and unnecessary adventures in the implementation of the logistic chain stages.

Prepared by ACEX team

 

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The magazine JŪRA has been published since 1935.
International business magazine JŪRA MOPE SEA has been
published since 1999.

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