How to Determine If Your Forwarder Is Financially Stable
How to Determine If Your Forwarder Is Financially Stable and Why Stability Is So Important
It doesn’t matter if you’re shipping or expecting cargo domestically or internationally, delays mean missed deadlines, unhappy customers, unhappy you, and wasted time and money. Yes, international shipping is complicated and it can be difficult for a cargo to get stuck somewhere in the world for a variety of reasons, unlike domestic shipping, but still… No one wants to experience delays in the transportation of their cargo – whether it’s the sender or the recipient.
One way you can avoid overseas delivery delays is to find a financially stable international shipping partner. A financially stable forwarder will add consistency and reliability to your international supply chain, which is especially important during times of crisis or the aftermath of a crisis, such as COVID-19. And yes, when there’s too much uncertainty, it’s not a good idea to take risks. It is important to be able to determine whether you are choosing an international freight forwarder who is financially stable and has the resources available to handle a smooth international shipment, especially when you need to act quickly.
How to Determine the Financial Stability of an International Shipping Partner
Ask lots of questions. The best practice is to be as transparent and honest as possible. Be direct and ask the questions you need answers to in order to feel confident in the freight forwarder you choose. Reputable international freight forwarders will be honest in their answers and transparent in their actions. You can also visit their websites to see which countries they serve. If they only serve a few, it probably means they are a smaller company. While “smaller” certainly does not mean “financially unstable,” it can mean that decision-making may be less efficient and/or they are less likely to withstand a prolonged economic downturn.
It is also a good idea to ask a potential international shipping partner or freight forwarder things like: How long have you been in business?; What volume of cargo do you ship per year?; Who are some of your best clients?; What companies do you typically work with?; What is the average length of your customer relationships?; What services do your customers typically use? Based on the answers to questions like these, you will be able to determine the level of trust that your chosen freight forwarder has established with their customers and understand their area of specialization. Lack of established customer relationships, services, or regular customers can indicate unreliability and, in turn, financial instability.
Another good practice is to ask for references. Although, references in international transport are not common and are not a particular practice, but still.
Investigate whether the company is investing in its future. Investment in the future can be seen as many and different things. For example - if a company has recently invested in some new equipment, expanded its services to new destinations, started working with new international partners, etc. it shows signs of financial confidence and stability. On the other hand, if a company is selling off assets or closing offices, this could be an indicator of financial instability.
Dig into the data. If you want to add another layer of confidence to your research on your freight forwarders, there are other ways you can use to find information about international freight forwarders. You can consult your attorney and/or look at their public annual financial statements, they can tell you a lot.
Also look at the company’s credit terms. Yes – there are companies that offer flexible credit terms, although this is not a very established practice in our country, it generally most often indicates that these companies are financially stable. If a company can extend reasonable credit terms, it means that it has the cash flow to pay the numerous suppliers needed to deliver your cargo to its final international destination, and all before receiving payment from you. Put another way, by providing you with credit terms, a company is saying that it has the financial resources to manage your shipment well after the goods are delivered – which could be 30–60 days or more.
Why financial stability is essential. You know that partnering with financially unstable international transport companies and forwarders can lead to delays in your cargo. You also know that the complexity of cross-border deliveries means that there can be a problem at any point in the process. A company’s poor payment history and reputation, for example, can leave your cargo stranded at your production facility, in a warehouse, at an airport or port, or just somewhere.
Unfortunately, the level of uncertainty is not exactly on the rise. In the wake of the global pandemic years ago, many companies in all sectors, including international transport by land, air and water, are still recovering, while those that were not financially stable before the crisis are facing even more difficult challenges – drastic layoffs, mergers, etc. In our field, for example, we, the forwarders, still often experience the additional delays and inconveniences of all this.
The key to finding a partner for international transport is long-term stability. No one is ever completely insured, but a company with a financially stable track record over time generally remains so. Established freight forwarders have proven, long-term relationships with customers, carriers, and additional service providers that help ensure that their international shipping services remain unaffected.
If you are looking for stable, reliable, and consistent international shipping, contact us and tell us about your international shipping needs today.
See more:
Is my cargo safe - Security tips
What we need to know when making a request for freight transport
Forwarder in Burgas