Honing in on best practices: Freight forwarders share keys to success

Concise communication, measurable quality control processes and development of critical technology are among the best practices deployed by airfreight forwarders. Sometimes, it’s a simple as having the right equipment.

Clear, verbal communication is a key component of Lima, Pa.-based Pilot Freight Services. Email won’t cut it for critical communication.

“Our best practice boils down to how we communicate, mostly internally,” Richard Phillips, Pilot’s CEO, says. “We have really pressed that in the last year or so. No. 1, we stay off email, especially for critical communication and pick up the phone as much as we can. That goes for internal as well as external for carriers and vendors. We get much better results and less is loss in translation when we pick up the phone.”

Building on that foundation, whenever a shipment is involved, there is always a team of Pilot personnel involved, and they are always communicating. There is no room for assumptions. Phillips says Pilot’s teams emphasize communication both when a situation goes well and when problems arise with a shipment.

“With respect to our customers, we communicate to the extent that the customer wants to communicate with us,” Phillips says. “You have to find a way to discern how much communication they want and in what form so that the communication from us to them is welcome and timely and useful.”

UPS, which has an extensive network on its forwarding side including service centers, regional ground and air hubs and international gateways, has developed in-house optimization tools that it uses to create forwarding scenarios on a regional basis.

“With so many moving parts and especially with all the changes in the market the last few years, we developed a process that allows us to take a look at routing guides and recalibrate if necessary so we can re-optimize our forwarding network,” Vito Losurdo, vice president, global airfreight for UPS Supply Chain Solutions, says.

Losurdo says UPS is able to model these regional outbound airfreight routings to ensure the company achieves optimal costs. An example of these would be the utilization of an alternative European gateway two or three times a week if it makes sense from a capacity and pricing standpoint.

“When we do this, we often look at the freight characteristics of what we move on a lane, the air capacity out there and we come up with scenarios,” Losurdo says.

UPS typically looks at these scenarios when there are changes in the market such as carriers cutting out or shifting capacity to alternate cities. These changes are more effective in Europe and the U.S. than in Asia because the geography is relatively compact, Losurdo says.

Another asset Losurdo cites is UPS’ global control tower at its Atlanta headquarters for its Temperature True service for temperature-sensitive shipments. Regional control towers are located in Brussels and Singapore.

“We make sure proper temperature transportation and handling happens around the clock and around the globe,” Losurdo says.

Responsibilities of personnel in the control tower include proactive tracking and tracing.

“There is human intervention that goes on through the life cycle of the shipment,” Losurdo says. “Our team is looking at certain monitoring activities throughout the shipment. We look for risks that are out there.”

For example, a shipment heading to Europe through the U.S. might face certain weather situations. Losurdo says the control tower team will hone in and watch the shipment closer and if needed, notify the customer. He describes the room, which seats about 30 people, as resembling a fish tank. Three LCD screens on the rooms help monitor world events.

“In general, the control tower has been able to mitigate excursions that were potentially gong to occur because of proactive monitoring,” Losurdo says. “We have been able to avoid the loss that would result from an excursion.”

Benno Forster, senior vice president and head of U.S. airfreight for Panalpina, says the company’s best practices include freight consolidation at gateways and sourcing of airfreight at certain locations. Combining shipments and building pallets at gateway airports such as John F. Kennedy International Airport is among the company’s top strategies.

“If you cannot build your own pallets, you will never reach the threshold to become competitive,” Forster says. “It gives us the best buying power and allows us to give customers the best rates. Of course, it has a lot to do with the productivity of our own people.”

Forster says Panalpina was one of the first freight forwarders to source airfreight from carriers.

“We might have been one of the first to use sourcing of our procurement,” Forster says. “What we do is basically invite all providers to bid for certain tonnage. These days, you cannot be without it. In order to get the best deal from a carrier, you have to tell them what you can offer on a worldwide basis. We tell our key carriers this is the worldwide tonnage we have and we split it into different trade lanes. It’s the same thing that big shippers do, companies like IBM or Apple – you name it. They do the same thing with freight forwarders.”

Vaughn Moore, president and CEO of AIT Worldwide Logistics, says one of his company’s best practices is to maintain a scorecard for both vendors and clients to ensure quality control.

“Internally, we use a vendor scorecard, and we do hold them accountable,” Moore says. “We measure monthly, and we meet with them quarterly. This includes issues such as on-time delivery and making sure we have all the items we needs. So we are in a true partnership and have an honest dialogue. We identify problem areas and things that may pop up on claims. I do believe we are doing a good job and are a best-in-class partner in that regard with vendors and our client base.”

Moore says AIT builds on the information gleaned from the scorecards and uses it to work toward continual improvement.

“It certainly holds us accountable to be a best-in-class partner with on-time shipments, low claim ratios and billing accuracy,” Moore says. “It makes us a better partner with our clients. We review trends with them and both sides are catching things that we can address. We have been able to identify problem areas that if we were not doing this, we would have missed.”

Moore notes that challenging economic times have forced forwarders to be diverse in their service offerings. He says companies have to be varied and focused at the same time.

“It’s a fine line we walk to be best in class in vertical markets such as perishables,” he says. “It’s a real tightrope walk.”

AIT has been in business since 1979 and despite the economy of recent years, it has shown strong growth over the past decade. Moore notes that the airfreight industry is undergoing challenges, but he remains optimistic.

“One industry that airfreight has never gone away from is perishables, and that will stay strong overall,” he says. “With manufacturing picking up, I am hoping to see some more just-in-time products get shipped out via air. There is a lot of near-sourcing going on, and it will be interesting to see what happens with that.”

Langham Logistics is an Indianapolis based 3PL that will mark its 25th anniversary in July. Cathy Langham, the company’s co-founder, president and CEO, says her company is diverse and is involved in forwarding, fulfillment, warehousing, pick and pack and airport logistics.

“What we do very well is leverage the strength of our team,” Langham says.

This came into play in 2012 when baking products specialist Clabber Girl, another Indiana-based company, became a customer. After a series of contacts led to a meeting with company officials, Langham Logistics had an opportunity to demonstrate its strong points.

“We came up with three areas of opportunity,” Langham says. “One of our folks is a good visual marketing person, and we synthesized their challenges into a one-page picture that allowed them and us to get a good picture of where the opportunities are and where to move forward. At that point, we had a contract of sorts, a working document that we all signed off on to make sure everyone was on the same page and moving in the same direction. It allowed us to move forward and bring our smart people and their smart people together.”

Langham says developing a simple visual solution and listening to Clabber Girl’s needs were the keys to getting its business.

Another practice that Langham says has worked well is a quarterly review process with the company’s largest accounts. She says this has helped grow the company’s business because it highlights not only the customer’s accomplishments, but also Langham Logistics’ accomplishments in general and gives an opportunity to talk about all the services it offers.