As our previous advice given, it’s 100% best to buy FOB terms from your suppliers which enables you to be in complete control of your own product, the moment it leaves the factory and/or you’ve paid for it.
The benefits are huge, and when explained shouldn’t even be contemplated in our opinion. However, as an importer you will now learn a whole new aspect to Logistics by opening up a new door that only comes with FOB Terms……
Price Wars and Forward Quoting
Yep, us freight forwarders will be emailing, calling, knocking on your door asking for your business and pitching why you should use us. Well, actually only the better established Logistics companies will tell you why you should use them, it’s the ones that concentrate on price only are the ones to watch out for.
By shipping FOB, you will have a problem that you didn’t have previously but, it’s perfectly fine if you are fore-warned and understand all there is to know.
Rates fluctuate. Fact. This is YOUR benefit where you enjoy the lows of rate reductions as well as putting up with when they creep up to the highs during peak seasons.
However, if someone isn’t enjoying your business, they can effectively quote what they like in order to make your existing freight provider look bad (or seem as if they’re Ripping you off in other words!). Chances are, they’re giving you a fair price according to the market. You need to decide if you’re happy with your provider and if your price is worth paying, or does the low price seem too good to be true? It’s complicated, but a good relationship is built upon trust, with the mutual goal of having a long term working relationship rather than a ‘quick buck’ mentality. Here at Westbound we strive for long term relationships, and like to portray ourselves as our clients Logistics Dept, rather than a supplier. Team work.
What some Logistics companies do is ‘Forward quote’. It’s quite easy to predict the highs and lows in our Industry, especially when freight starts to drop….. it usually continues once it’s started, and that’s when it’s very easy to pitch a rate that’s going to be likely a ‘real rate’ in 2-3 weeks time. If you bite the bait, place a booking, when does the container sail?
All of a sudden, “Hey Presto” – somebody has succeeded in making your existing rates look bad!Here is a really helpful animation on how this works exactly.
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