When looking for freight forwarders and 3pl providers to help with imports into the US, should I focus on companies in the US or in China?

Full Question

Hello, My name is Ronan Galvin and I am new to the import/export industry and your site has been a big help to me. I recently attended the Canton Fair in October and I have come across some products that I would like to export back to the United States (Seattle, WA) from Guangzhou, China. In terms of freight forwarders and 3pl providers, should I be looking for companies in China or in the States? Also, could you please provide me a list of recommended freight forwarders/3PL providers? Thank you so much, Ronan.

Answer

Dear Ronan, thanks for your question. At the time of writing we don't offer an endorsed service provider for logistics because so often the ideal partner depends on the location of the buyer and the readership of this website is global. I have yet to find a 3PL that has true global coverage. A lot of 3P's will say they have global coverage in their marketing, but I have found that when you dig deep into their experience you will find they focus on certain shipping routes or destination ports. And the giant freight forwarders that do have offices around the world are usually not interested in smaller accounts. So if you are moving less than 20 containers per year, they may not be a good fit anyway.

Since we don't have a ready-made list of 3PL providers to give you, let us share with you something far more valuable - how to find the right 3PL for your particular needs.

Just like picking suppliers in China, the problem isn't finding a 3PL, as there are so many to choose from, the problem is how to find the right one for you. Assuming you keep it easy and purchase "FOB China Port" from your supplier, then the role of your 3PL will be to orchestrate the movement of your goods from the China port to your destination point. In most cases this means organizing ocean freight or express air for the international leg of the journey then customs clearance in your national plus local trucking for domestic delivery. As such, you should be looking for 3PL that have experience importing products from China into the specific domestic port you have in mind back home.

1. Pick up the phone book or do an internet search with key words such as "3PL" or "Freight Forwarder" + "name of port". This will most likely generate a significant list.
2. The next step is to contact them and learn if they will be a good fit for you. I like 3PL's that have at least 5 years of experience importing products from China into the given port.
3. And as I have mentioned a few times before, it is worth saying again, if a service provider can't give you a list of client references they probably aren't worth doing business with.
4. Once you narrow it down to a handful of option based on initial talks and references, ask for an estimate on freight. What separates the great companies from the good ones will be the format and timing of their quote. If they take more than a few days to get back to you, it probably means that they don't have well developed shipping channels and are trying to set something up just for this order. Try to avoid having your order serve as some 3PL's first attempt at doing business with China. Pay special attention to the format of their quote. It should be an actual form based on a template, not just a few sentences or pricing sent via email. If they don't have a set format for estimates or quotes, that is a real bad sign about the level of their professionalism. The quote should be easy to understand and if you are unclear about a particular line item on the quote, then the 3PL should be able to explain to your satisfaction. Don't be afraid to ask questions! Better to ask in advance before getting hit with surprise charges later.
5. Shipping rates change on a day to day basis, and unless you are ready to ship immediately after receipt of the quote, most likely the quote will be an estimate. So we like 3PL's that will hold their quote valid for certain time or at least offer to re-quote closer to the actual ship date so that the buyer knows the exact costs in advance.
6. On countless occasions, I have had shippers send me invoices after delivery that were much higher than the agreed estimate. So as you are confirming price, ask the powerful question "Does this price include everything to get the product from X to Y, even taxes, duties?", "Is there anything that is not included?" and "Will you put in writing that the amount to be invoiced will not exceed the agreed estimate?".
7. It also helps to negotiate your terms with the shipper so that the goods are paid upon delivery, as opposed to paying them upfront. But actually, you don't have a lot of leverage because the shipper has physical control of your goods and could choose not to immediately release them if there are any confrontations about pricing at the last minute. So it is very important to find a professional company upfront and negotiate the terms and pricing well in advance.

Since you are new to sourcing, if you need reference materials about how to engage the potential suppliers, conduct a RFQ (request for quotation), control quality and answers to a host of other common sourcing concerns, know that you can find articles and videos at www.SmartChinaSourcing.com and www.ChinaSourcingInfo.org. If you need fee-based 3rd party support to help you find and manage suppliers, you can find a list of reputable service providers on those two websites as well.